Will the implementation of the GST be announced in Budget 2014?
The Sun Daily reported that the government is working to include the long-delayed consumption tax in the upcoming Budget 2014 for it to be introduced by 2015.For those who have been following my seminars and talks, you would realise that I had talked about this and was anticipating some form of announcement on the implementation of the GST during the upcoming Budget 2014.
As for the GST rate, it had been suggested earlier that a rate of 4% will be introduced, but considering the governments’s dire need to reduce its annual budget deficit, I won’t be surprised if a higher rate of say, 6% is implemented instead, to be in line with the current service tax rate and a trade-off on the sales tax rates of goods of between 5% to 10%.
On the bright side, with the implementation of the GST, there should be a corresponding reduction in personal and corporate tax rates. By how much? That is left to be seen.
The Sun Daily’s article is reproduced below:
KUALA LUMPUR (Aug 30, 2013): The government is working to include the long-delayed consumption tax in the upcoming Budget 2014 for it to be introduced by 2015, said Finance Ministry secretary-general of Treasury Tan Sri Dr Mohd Irwan Serigar Abdullah, adding that the goods and services tax (GST) is “no longer an option”.
“We are going around having dialogues and discussions. It will take 14 months to implement (the GST) and if they (government) announce it this year, it will come online only in 2015. And if we were to implement, it will be a total package… addressing corporate tax, personal tax, everything. Nobody will be left out,” he said at the Economic Transformation Programme (ETP) mid-year review yesterday.
“But the ultimate aim of the GST is to take care of the country and the people, so anything we introduce will not burden the people. We will take care in terms of the tax burden on the people,” he added.
Mohd Irwan said various rebates and zero-rated items have been identified. The zero-rated items are basic necessities such as rice and milk powder.
He also said Prime Minister Datuk Seri Najib Abdul Razak will make an announcement on the subsidy rationalisation programme (SRP) soon.
“It (subsidies) will go gradually and won’t impact the economy or the people at large. It’s a gradual sort of liberalisation,” he said, adding that the Fiscal Policy Committee will meet on Monday for further discussion.
He said the savings from the SRP will be re-allocated to the deserving public in the form of BR1M and other forms of assistance.
“The announcement of the overall package (for the SRP) will come gradually, starting most probably next week,” he added.
Meanwhile, in Kuching, Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah was reported as saying that the GST need not necessarily be announced during the tabling of Budget 2014.
“We are still studying its effects on the economy. We want to ensure, if there is increase in prices, how high the increase would be and how it might affect the rakyat, as in the end, priority is given to the well-being of the rakyat,” he told reporters after launching the Finance Ministry’s Open Day 2013 at the Royal Malaysian Customs Academy Sarawak yesterday.
The introduction of GST has been a hot topic for debate, with economists and tax experts expressing differing views on the appropriate initial rate.
At the ETP mid-year review yesterday, Performance Management and Delivery Unit (Pemandu) CEO Datuk Seri Idris Jala said 86% of RM25.42 billion in committed investments for projects in 2011 and 2012 have been realised.
“The realisation rate of these investments are healthy and we are on track towards meeting our targets for the year,” he said.
He said it is confident of achieving the 2013 fiscal deficit target of 4% and government tax revenue this year is expected to exceed the RM207.9 billion recorded last year. The government tax revenue for the first half of 2013 stood at RM95.4 billion.
Growth of private investment is also on track, from 58% of total investments last year to 65.7% for the first half of this year. Total private investments have increased from RM94 billion in 2011 to RM140.18 billion in 2012.
Jala said the 2013 target for private investments is RM148.4 billion and it has already achieved 57.7% of the target or RM85.7 billion during the first half of the year.
He said the ETP will continue to anchor economic growth despite the tougher economic outlook this year as a result of developments in the global economy.