By Chan Quan Min
Mohd Irwan Serigar Abdullah
The long-delayed Goods and Services Tax (GST) could be included in Budget 2014, to be tabled in October this year, as part of government efforts to narrow the fiscal deficit, said Ministry of Finance secretary-general Mohd Irwan Serigar Abdullah.
This morning’s edition of the Malaysian Reserve quoted Mohd Irwan as saying the government is considering a slew of fiscal reforms in efforts to improve the country’s monetary position.
“I am not ruling out (the GST), it is in the pipeline. But let us wait for the budget. It is a whole package for everybody,” Mohd Irwan told the business daily during an interview in Putrajaya yesterday.
Fiscal reforms are needed to reduce the country’s debt position to below 55% of gross domestic product (GDP), cut the fiscal deficit to 3% by 2015 and to restore a balanced budget by 2020, Mohd Irwan added.
Tax professionals were not expecting the introduction of the GST, a broad based consumption tax, until 2015 at the least, although the new tax has been in the pipeline since 2009.
Should the announcement on the introduction of the GST be made later this year, it will likely be implemented in 2015, said Tan Eng Yew, Country GST Leader at Deloitte Malaysia in a GST workshop today organised by the accounting and professional services firm.
According to Tan, the impact of the introduction of the GST on the price of goods and services is expected to be uneven, with some items increasing in price while others will experience a decrease.
Overall, the consumer price index (CPI) should remain relatively unchanged, said Tan, adding that when implemented, the GST will replace the current indirect taxation regime of sales and service taxes, currently pegged at a rate of 10% and 6% respectively.
“The government has said (in discussions with stakeholders) that this is a replacement tax to start at a very low rate,” Tan explained.
Tan is a proponent of the GST on the grounds that it is a more efficient way of collecting tax revenue.
As a tax solely on the value-added amount on each level of the supply chain, the GST does not penalise business-to-business transactions to the extent of the current sales tax regime, Tan added.
Separately, Second Finance Minister Ahmad Husni Mohamad Hanadzlah said yesterday the government’s fiscal committee would meet next week to discuss ways to strengthen Malaysia’s financial position.
A Bernama report quoted the minister as saying the meeting would table for approval various initiatives to ensure Malaysia’s economy would be strong and sustainable.
Ahmand Husni, said Prime Minister Najib Razak, who is also Finance Minister, would announce the outcome of the meeting.
The GST has been adopted by as many as 156 tax jurisdictions. Malaysia, Brunei and Myanmar are the only countries in the Asean trading bloc that are yet to implement a GST.
Across the Causeway, Singapore introduced a GST in 1994 at an initial rate of 5%, later increased to the current rate of 7%.
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