GST reintroduction needs to be implemented in a targeted way, says former Customs D-G

KUALA LUMPUR, June 2 — The reintroduction of the goods and services tax (GST) to replace the sales and services tax (SST) must be implemented in a targeted manner so as not to burden the people who are facing rising inflation.

According to former director-general of the Royal Malaysian Customs Department Datuk Seri Subromaniam Tholasy, the GST tax imposed at six per cent previously should be extended to goods tax at five per cent and service tax at seven per cent.

“The government needs to look back at zero-tax items where this time it should only be limited to basic items,” he said during the Malaysia Petang Ini programme on Bernama TV today.

Subromaniam said if the tax rate was set too low up to four per cent, it would only contribute to neutral income, while higher rates could increase the country’s income and finances, and raise the stock market.

“It will directly impact the strength of the ringgit against the US dollar,” he explained.

He also said the re-implementation of GST should take into account the appropriate timing, the strength of the ringgit as well as public policies provided by certain ministries besides ensuring that inflation can be controlled.

“There is no denying that the previous implementation of GST in 2015 had several weaknesses such as subsidy reduction, rationalisation of electricity tariff rates and the depreciation of the ringgit which caused the consumer price index to increase.

“The current consumer price index is rising but it does not translate into more revenue for the government because the impact of SST only reaches the import and manufacturing level for goods compared to GST which impacts up to the retail level,” he said.

Apart from that, Subromaniam also suggested that the government not set the threshold value too low as before at RM500,000 so that small businesses are not included in the implementation of GST.

“Maybe we can see a threshold value that is more suitable with a rate of between RM1 million and RM2 million so as not to burden businesses like a regular grocery store,” he said.

He said GST is a very efficient, transparent and fair and business-friendly taxation system that can improve the country’s economy and provide stronger competitiveness to the country’s exports.

“Therefore, GST will definitely stabilise the price of goods in the long run,” he added. — Bernama