KUALA LUMPUR: Pakatan Harapan (PH) will need to explain how it will make up for the shortfall in the country’s source of income if it goes ahead in abolishing the Goods and Services Tax (GST).
World Bank Malaysia Country Manager Faris Hadad-Zervos said Malaysia’s economy would likely face long-term negative effects if the GST was abolished, as the move involved a huge loss of income to the country’s coffers.
Last year, Malaysia’s coffers saw RM45 billion being remitted from the GST collection.
In relation to this, Hadad-Zervos, through a video posted on a portal, posed questions to PH leaders in the event the GST is abolished.
The questions included:
What other income sources will be required for the country after the GST is abolished?
Do you want to reduce the country’s source of income?
Do you want to rely on commodities when their price are uncertain in the world market?
He posted these questions at https://www.nx.digital/archives/world-bank-gst-abolition-to-bring-negati... -msia-economy- Hadad-Zervos asked whether abolishing the GST would also reduce the country’s source of income portfolio.
“What do you want to give to the people when the GST is abolished?
“What services, benefits or expenses will you dispose of?”
PH’s pledge in abolishing the GST and restoring the Sales and Service Tax (SST) is considered a populist measure, as there was never an explanation on how the revenue shortfall of about RM20 billion would be replaced following its abolition.
Hadad-Zervos said the implementation of the GST had helped the government provide cash assistance to target groups through the 1Malaysia People’s Aid (BR1M) while reducing the cost of living.
However, he said BR1M should be further improved according to the location and number of family members of recipients.
“As of now, families in Kelantan who receive BR1M get the same payment as families in Kuala Lumpur.
“Families with five children also receive the same amount as a family with one child. So, it needs to be more detailed and carefully crafted.”
Prime Minister Datuk Seri Najib Razak had stated that Malaysia would end up being a deficit country like Greece or Italy if the GST was replaced by the SST as pledged by PH in its manifesto for the 14th General Election.
To date, 164 countries had implemented the GST with the latest being India.