AmResearch believes the new timeframe for the implementation of the proposed goods and services tax (GST) could be sometime around 2012, when the economic environment is more stable and conducive.
The research house said on Thursday, Oct 14 that it also hoped the government would introduce a relatively low-rate GST, at around 3%.
“More importantly, personal and corporate tax rates should be reviewed, in other words made more competitive vis-a-vis those in the region,” it said.
“Critically, there must be a “strong political will” to implement the unpopular consumption-based tax. The key is to set a clear and credible GST roadmap to ensure its smooth implementation,” it said.
Late Wednesday, the government said it would again delay the implementation of the GST due next year in the face of strong public opposition.
The Finance Ministry said the GST would ensure “a strong and sustainable fiscal position to support the long term economic growth,” but assured that it will hear out the people’s concerns prior to its implementation.
To recap, in late 2009, the Second Finance Minister had said the government planned to introduce GST at a proposed rate of 4% sometime early next year. In comparison, the proposed tax is lower than the current services and sales tax of between 5% and10%, but that has still not been well-received by the consumers.
AmResearch said in its opinion, the postponement would be the right thing to do, as people are not well informed and educated about the changes and implications.
“However, we welcome any move to streamline the taxation system in Malaysia, moving towards a competitive economy to attract more FDI, which is key to achieving the high-income developed status by 2020. GST also contributes towards a better management of the taxation system,” it said.
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