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Wednesday, October 15, 2014

GST WILL WIPE OUT BR1M: Each adult & child will pay RM270 in GST next year - Wong Chen warns

GST WILL WIPE OUT BR1M: Each adult & child will pay RM270 in GST next year - Wong Chen warns
Every man, woman and child will pay about RM270 each in Goods and Services Tax (GST) from April to December next year, a Pakatan Rakyat lawmaker told a forum last night.
This means an average household will be paying RM1,084 in GST, more than what a low-income household gets in cash aid through BR1M, said Kelana Jaya MP Wong Chen.
He claimed this was an accurate calculation of the effects of the new tax system slated to start in April next year, refuting Putrajaya's claim that it would only earn RM690 million in nett revenue from the GST in 2014.
According to Wong's formula, Putrajaya is expected to earn a nett profit of RM8.5 billion from the GST.
“You take RM23.2 billion that the government is supposed to get in gross revenue for GST. Subtract the loss of Sales and Services tax at RM13.8 billion and BR1M payments of RM1.3 billion.
“So, the actual gain from GST is RM8.5 billion. Divide that up by 30 million people in Malaysia and you get the RM270 per person, including children,” said Wong at Pakatan Rakyat's forum on the 2015 National Budget in Subang Jaya, Selangor.
The government will introduce a GST of 6% in April and justified it as a more efficient way of collecting tax and filling public coffers.
Putrajaya also claimed that although it expects to collect RM23.2 billion in gross revenue, only RM690 million is actually nett gain.
Wong and PR, however, dispute this, saying that the government stands to collect RM8.5 billion in nett gain.
Although Putrajaya says the new tax is necessary, the public is sceptical and worry it will lead to runaway inflation.
Currently, only 18% of the population pays income tax, while more than half of the country’s 7 million households make less than RM4,000 a month.
Critics claimed that it was not the right time to implement GST in Malaysia as it would burden low-income households.
To cushion the impact of GST, Putrajaya has increased the amount of BR1M cash aid. Households with an income of below RM3,000 will get RM950 while those earning between RM4,000 and RM3,000 will get RM750.
“But according to our calculations, BR1M does not cover the expenses from GST for low-income households,” said Wong.
Another speaker at the forum, Rafizi Ramli, said PR was against the implementation of GST at this stage of Malaysia’s development because of the overwhelming number of people who earn low wages.
“As long as our wages are not keeping up with inflation and our economy is not fair to workers, we should not implement GST,” Rafizi, who is also Pandan MP said.
“When Singapore and Australia introduced GST they ensured that workers’ pay was up and that many were already paying income taxes.
“So GST for them, was just a different way of collecting taxes but without increasing the tax burden,” said Rafizi.
In Malaysia, where more than 75% of the country’s population do not earn enough to pay income tax, a new tax system would burden them, the PKR secretary-general said.
Instead of GST, the Opposition coalition has been pushing for the introduction of a Capital Gains Tax (CGT) that would instead tax profits from investments of the richest Malaysians.
Serdang MP Ong Kian Ming explained that many countries had implemented CGT successfully without scaring away investors.
“We want to tax profits on shares according to worldwide best practices, meaning pension and retirement funds such as EPF can be exempted,” said Ong.
According to PR’s projections, a CGT would bring in RM3 billion in 2015 without adding another tax burden for low-income Malaysians. –TMI

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