KUALA LUMPUR: The possible reintroduction of the Goods and Services Tax (GST) could be used as a stabilisation policy when the country’s economy faces strong headwinds, say experts.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said any effort including the possible reversal of the current tax system, the Sales and Services Tax (SST), to the GST in the future could buffer the downtrend impact.
He added that as the global economy faces a slowdown, an efficient tax system is needed to ensure the local economy can face the pressure.
“It would be good in terms of increasing the government’s revenue, as relying on oil revenue is risky as oil prices are constantly in a volatile situation,” he told Bernama.
Afzanizam said Petronas should increase its oil reserves, both domestic and overseas, hence a tax system that does not rely on oil revenue to cover the shortfall is much needed.
However, he emphasised the need to provide clear information in a transparent manner in order to avoid any misconception about the new economic policy currently being implemented.
Tax experts said with the current oil price hovering around US$55 to US$65 per barrel, the 2020 Budget should be drafted based on that price range to avoid over-dependency on Petronas’ reserves.
Since last year, benchmark Brent Crude had peaked at US$84 per barrel before sliding to US$53 per barrel in January, and hovering between US$55 to US$75 until today. Meanwhile, YYC Holdings Sdn Bhd CEO Datin Yap Shin Siang said it was undeniable that the GST is a more efficient system for businesses.
“This is because currently under the sales tax regime it becomes a cost to businesses, but under GST it is claimable as input tax.
“We also suggest several improvements in areas such as simplifying the tax codes and reporting system as well as speeding up the refund process,” she said.
Both Afzanizam and Yap agreed that the GST could start at a lower rate than the previous six per cent, possibly at three per cent.
Prime Minister Tun Dr Mahathir Mohamad said yesterday that the government might consider reviving the GST, which was abolished last year, and that it could be reintroduced at a lower rate to help boost government coffers. – Bernama
