BRING back the Good and Services Tax (GST) only if the Government is willing to reform the income tax system and introduce a living wage system for the workforce.
“With the COVID-19 pandemic, it’s obvious that the Government needs a more stable consumption tax compared to the Sales and Services Tax (SST) for a more sustainable revenue base.
“But I strongly advise before bringing the GST back, we need to reform the income tax system to make it more progressive.
“Plus, we must also do away with the minimum wage policy and replace it with the living wage system so that the poor will not be burdened,” Parliamentary Select Committee for International Relations and Trade chairman Wong Chen told FocusM.
Last month, Malaysian Trades Union Congress (MTUC) Penang chapter secretary K Veeriah also called for the Government to introduce the living wage concept as cost of living in Malaysia has shot up exponentially.
The MTUC leader also said due to the rising cost of living, many workers have no choice but to work overtime to make ends meet.
“Bank Negara Malaysia (BNM) report in 2018 have indicated that for one to live decently in the Klang Valley, the individual needs to earn a minimum of RM2,700 monthly.
“Based on BNM’s assessment, employees are far off in terms of wages because our current system is modelled based on the minimum wage policy.
“The fundamental flaw here is our existing employment system suppresses wages, affecting both local and migrant workforce,” Veeriah was reported saying.
Elaborating, Wong Chen suggested that if the Government does decide to bring back the GST, it should be at a lower threshold of 3% and maintain the same percentage for at least five years.
“The fundamental mistake Najib made when he introduced the GST in 2015 was that the 6% threshold was too high.
“Plus, he also did not commit on how long the threshold will be maintained. So, I hope the Government will take my vies into consideration,” the Subang MP said, adding that the Government should also increase cash handout for the poor following the new tax regime.
In 2015, then Prime Minister Datuk Seri Najib Tun Razak introduced the controversial GST taxation regime, at a 6% threshold, to replace SST, citing weaknesses in the latter’s system and the need to increase Government’s revenue.
When Pakatan Harapan took over federal powers, it immediately scrapped GST and replaced it with the SST.
However, with the economy being battered by the COVID-19 pandemic, the Government is now mulling to reintroduce the GST to top up the nation’s coffers.
Several tax experts have cautioned the Government against introducing the GST during an economic down, citing the people will be burdened as many have lost jobs or suffered an income reduction. – Jan 2, 2021.
