Sun06242018

LAST_UPDATESat, 23 Jun 2018 9pm

Ensure New Tax System Is Solid, Without Loopholes - Analysts

KUALA LUMPUR -- The Pakatan Harapan government must ensure that the new tax structure which will be implemented following the abolishment of the Goods and Services Tax (GST) must be solid and has no loopholes.

LeInves PLT Chief Investment Officer William Ng said although the Sales and Services (SST) would be re-introduced, the loopholes in the system must be addressed first as it may pave the way for some people to evade paying taxes again. 

"In my opinion, the GST is a better system because no one could escape and it is a well-known tax structure that is currently being implemented in 160 countries including our neighbour, Singapore,” he told Bernama today.

He said that upon the abolishment of GST, there was no guarantee that the prices of goods would drop, unless big industry players reduced prices significantly and benefit the hawkers and retailers, and finally the end users. 

“Whether prices of good and services will come down is real or they (prices) remain the same, we need to watch the market performance, including petrol prices. Bear in mind, things may not be cheaper as what the consumers think,” he said.

Yesterday, the government announced that all goods and services that was subjected to six per cent tax rate under GST will be zero-rated starting June 1.

GST was introduced in April 2015 to replace SST as the tax structure is said to be more efficient. 

Ng said that there is actually no negative attribution to GST but the people perceived it as a way the previous government pays its debts. 

“Other countries like Singapore has no problem because the revenue collected from GST were visible to their citizens and the people enjoys the benefits, but for Malaysia, it is not favourable because the GST revenue was not seen as benefiting the people,” he said. 

Meanwhile, the Malaysian Association of Technical Analyst Professional Member Amir Hassan said that the zero-rating of GST could see further improvements in consumer sentiments, although that has not been the problem seeing that consumer spending has been driving gross domestic product growth despite the GST.

"For businesses, however, there could be some complications in terms of invoicing and accounting for GST especially for items ordered before the effective date and received after," he said.

As for the re-introduction of SST, Amir said it would be depend on the scope of items to be taxed and what the tax rate would be.

"If the scope of goods to be taxed is narrower, then, maybe we will see less price pressures. 

“We have to take note that SST is a cost to producers and gets compounded on its way up, whereas GST is tax collected from end consumers, and appears as a claimable tax credit for producers," he said.

-- BERNAMA