ALHAMDULILLAH (Praise be to God), tomorrow, Malaysians will cast their votes in the 14th General Election.
Many are raring to go and vote after campaigning.
Numerous issues have been raised in the campaign. One that is debated is the Goods and Services Tax (GST).
Allow me to touch on points related to GST, which was introduced three years ago.
THE six per cent GST replaces the 10 per cent Sales Tax and six per cent Services Tax. GST is not an additional tax;
THE six per cent rate is the lowest in Asean and among the lowest in the world.
A total of 160 countries have implemented GST, or Value Added Tax. For example, the rate in Singapore is seven per cent; Indonesia, 10 per cent; Vietnam, 10 per cent; and, the Philippines, 12 per cent.
In Australia, it is 10 per cent, while in the United Kingdom, it is at 20 per cent;
TO cushion the impact of the rising cost of goods on people, the government has expanded the list of essential items, such as certain foods, medicines, books and RON95 petrol and diesel, which are zero-rated.
When GST was announced in the 2014 Budget, the government announced offset measures, such as the reduction of personal income tax; reduction of corporate income tax; and, reduction of small- and medium-scale enterprises tax.
The 1Malaysia People’s Aid (BR1M) for households with a monthly income of RM3,000 and below was increased from RM500 to RM650, while households with a monthly income of RM3,000 to RM4,000 received RM450 for the first time.
In the 2015 Budget, the payout was raised for both categories to RM950 and RM750, respectively.
For unmarried Malaysians who earned RM2,000 and below, the payment was increased to RM350; and,
THE goal of GST is to widen the tax base. It is a consumption tax, which means only those with a higher income level are affected.
By increasing government revenue, we can not only reduce the fiscal deficit, but also carry out more development projects.
This includes the construction of the Pan-Borneo Highway, which is in full swing and expected to be completed by 2022.
There have been calls for GST to be abolished and SST reinstated. This is regressive and could endanger the economy.
This is because the GST collection last year was RM42 billion and is expected to increase to RM44 billion this year.
In comparison, SST collected only RM17 billion in 2014. If GST were abolished, there would be a revenue gap of RM27 billion.
The government would have to raise the income tax rates, introduce a new taxation system, reduce spending, delay projects, and raise the fiscal deficit to three and five per cent.
All these options are risky as it can affect the capital market and result in the country’s international credit rating going down from A3/A- to BBB. This will affect borrowing costs and place the economy in jeopardy.
As the polls are tomorrow, I urge my friends to do these:
GO out to vote as early as possible;
DO not allow political views to split or divide families;
ACCEPT decisions with an open heart, tighten our bonds and unite for the sake of developing the country; and,
PLAY our roles and adopt a positive attitude by embodying and practising the principles of Rukun Negara.
ABDUL WAHID OMAR