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Thursday, March 18, 2010

BN delays GST until after next election

KUALA LUMPUR, March 18 — The Najib Administration will only revive the introduction of an unpopular consumption tax after the next general elections where it hopes to regain Barisan Nasional’s (BN) customary two-thirds parliamentary majority.

The government last week announced it was putting the Goods and Services Tax (GST) Bill on hold despite indicating it will go ahead to debate the law in the current Parliament sitting.
The decision comes after feedback from BN MPs suggested that opposition to the GST was also palpable among component party members apart from the Pakatan Rakyat (PR) bench.
“BN will delay the GST Bill until after the next general elections to ensure we win big,” a BN MP told The Malaysian Insider on condition of anonymity.
He said it would take time to gather public feedback and also to educate people about the GST which the government said will initially be four per cent, substantially lower than the present Sales and Services Tax of between five and 10 per cent.
“The reality is that people don’t like the new tax and the PM is aware of it,” the MP said, referring to Datuk Seri Najib Razak who had stressed that “the days of government knows best is over” when he took office last April.
The opposition has flayed BN over the tax and claimed it was scuttled due to their campaign. However, they want the tax proposal to be completely dropped and have promised to make it a campaign issue.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said last Saturday the government delayed the Bill for more time to gather public feedback.
“It (the GST) will not be tabled for second reading in the March/April session (of Parliament) because we need more time to engage with the public. We want the public’s opinion on GST,” Husni told reporters after opening the Kuala Lumpur Malay Chamber of Commerce (KLMCC)’s annual general meeting.
However, the move was interpreted as retreat of sorts by an administration that has not put forth the most convincing argument for introducing the GST.
It is understood that BN lawmakers, and even senior Umno officials, have asked the government to reconsider the unpopular move.
“If it’s true that the debate will be delayed then the government can use the time to explain the issue to the public... each sector in turn so that the public truly understands what the implementation of the GST means,” said Sri Gading MP Datuk Mohamad Aziz, when contacted by The Malaysian Insider.
The GST, which would have generated revenues totalling around RM8.8 billion, was due to be introduced in 2011, to replace an existing sales tax as part of measures to reduce Malaysia’s dependence on oil revenues, which currently account for almost half of government income.
Malaysia’s budget deficit hit a more than 20 year high of 7.4 per cent of gross domestic product in 2009, according to government data.


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