Do you agree that GST should be implemented in Malaysia?


e-Poll Results by Royal Malaysian Customs

e-Poll – “Do you agree that Goods and Services Tax (GST) should be implemented in Malaysia?”

The e-poll is put up by Royal Malaysian Customs at its official website to gather and understand public feedback on the implementation of GST in Malaysia. 

Out of the total votes (1,213), 924 votes or 76% were disagreed with the implementation of GST, while 262 votes or 22% agreed with it. The e-poll results may not be a good representative of public feedback as it is only involved 1,213 votes or people perhaps.

What are the benefits or pros & cons for implementing GST in Malaysia? Among the pros and cons, benefits/advantages or disadvantages of GST perceived by the public are:-

Reasons support for GST:

  1. Increase national/government revenue and mitigate the heavy reliance on income tax and petroleum tax, in which income taxes contributed 44.4% of government revenue in 2010.
  2. Tax burden will not increase when income level increased.
  3. “Everyone” will pay tax and tax burden is spread over, instead of just relying on income taxes derived from 15% of the working population.
  4. Overcome the loopholes of current sales and services tax systems.
  5. Eliminate over-lapping tax at different stages, as GST is generally charged on the consumption of goods and services at every stage of the supply chain, with the tax burden ultimately borne by the end consumer.
  6. More stable for government revenue with GST as a consumption tax based, compared to direct income taxes and minimise the impact of economic cycles, particularly during recessions.
  7. Corporate tax and individual tax rates could be reduced.
  8. Minimise the occurrences of tax evasions.

Reasons disagree with GST:

  1. May result in inflation as general products prices may go up.
  2. Increase the tax burden on low income working group (the other 85% as described item 3 above)
  3. The government may possibly increase the GST rate from 4% to 15% to increase revenue.
  4. Worry that the GST tax may even higher than current sales tax 10% and service tax 5%.
  5. Worry that the effect of tax revenue re-distribution may not be achieved.