GST would have slashed income, corporate taxes: Najib

KUALA LUMPUR – The government could have afforded to reduce personal income tax for Malaysians, as well as corporate tax, had the goods and services tax (GST) been maintained, said Datuk Seri Najib Razak (Pekan-BN).
 
The former prime minister, who was responsible for introducing the infamous tax system in April 2015, said the GST would also have reduced the income gap among the rich and poor. 
 
In this regard, Najib urged the government to reintroduce the GST immediately after the country recovers from the impact of Covid-19, if it wishes to address the issue of income disparity, attract investors and strengthen its fiscal position. 
 
In debating the 12th Malaysia Plan today, the Umno lawmaker noted how neighbouring countries in the region that use GST are able to reduce their corporate taxes and make them more attractive to businesses. 
 
He said Malaysia, on the other hand, became the country with the highest corporate tax rate in Southeast Asia at 24% last year, even higher than that of the United States (21%).
 
“Politically motivated incitements that led to the abolishment of the GST have hindered the Barisan Nasional (BN) government’s desire to reduce corporate tax gradually to 17% and make us more competitive. 
 
“Tax revenue from the GST is capable of providing some space to the government to lower this tax, as well as the personal income tax,” he said in the Dewan Rakyat today. 
 
Najib argued that, while Malaysia is still among the better nations when it comes to public infrastructure, foreign investors are unlikely to choose the country, looking at its smaller domestic market and higher corporate tax rate. 
 
The BN government introduced the GST on April 1, 2015 at a rate of 6%, despite huge backlash. However, soon after Pakatan Harapan came to federal power in May 2018, the coalition abolished the tax system as part of its election promises. 
 
Najib said, three years after its abolishment, it has been proven that the public’s perception that the GST caused the prices of goods and services to increase is false. 
 
In fact, he said prices under the reintroduced sales and services tax (SST) are the ones that saw a spike, including for products such as meat, chicken and cement. 
 
“It must be realised that the GST is a consumption tax. The more a person spends, the higher the GST rate,” he said. 
 
Additionally, Najib said the GST would also have targeted the RM300 billion worth of the black economy, and reduced its size from 25% of gross domestic product (GDP) to just 10%. 
 
He said revenue from the tax system could have been distributed to the B40 and M40 income groups in the form of bigger cash aid compared with the amount spent on the GST. 
 
On a separate issue, Najib urged the government to implement the Kuala Lumpur-Singapore High-Speed Rail project as per originally planned, as opposed to the revised route from KLIA to Johor Baru. 
 
He said the new, shorter line will make the project unviable and effectively cause the country to lose out, especially with billions in subsidy to be spent. 
 
“By returning the HSR project to its original plan, it will also be able to revive the RM140 billion Bandar Malaysia project in terms of gross development value,” he said. 
 
Najib also proposed renaming the project to Bandar Asean in a bid to attract the international community and make Malaysia a regional hub. – The Vibes, September 28, 2021