Najib insists GST will build stronger, transparent economy

Datuk Seri Najib Razak says the GST will reduce Malaysia's dependency on oil and gas revenues. – The Malaysian Insider file pic, May 27, 2015.

Amid criticism over the implementation of the goods and services tax (GST), Datuk Seri Najib Razak today reiterated that the tax was to help build a stronger, more sustainable and transparent economy.

The prime minister cum finance minister said GST would reduce Malaysia's dependency on oil and gas revenues, noting that with the recent fall in global prices of the commodity, Malaysia could not sustain its development plan on that income stream alone.

"At the moment, only 1 in 10 Malaysians pays personal income tax, and it is important that we broaden our tax base for the long-term good of the economy," Najib said today in the FAQ section of his website, najibrazak.com.

"It will help reduce our deficit, help us invest in our future, and help drive forward our national development."

The GST was implemented on April 1, replacing the sales and service tax (SST) which was generally at 10%. 

Najib's administration has been under fire by critics for implementing the GST without tackling leaks and wastage in the public delivery system, and for adding to the cost of living. He has also been criticised for handing out cash aid through the 1Malaysia People's Aid (BR1M).

Chief among his critics has been former prime minister Tun Dr Mahathir Mohamad who has called for his resignation.

However, Najib has defiantly insisted that he would not bow to pressure for him to step down as prime minister, saying that he would remain in the job with support from Umno and trust from the people.

Today, Najib said critics of the GST, including politicians have portrayed the GST as an "unusual and unnecessary" measure instead of looking to understand the economic rationale and long-term benefit of the tax to the people.

"GST is not a new phenomenon. More than 160 countries have already implemented this and in Asean, our neighbourhood, we are the 8th country to introduce the tax.

"Furthermore, Malaysia’s 6% rate is actually one of the lowest in the world. By contrast; the Philippines, Cambodia, Vietnam, Laos and Indonesia all have a 10% GST rate.”

He, however, admitted that there were unscrupulous businesses which were trying to take advantage of the situation to increase prices of their goods above the 6% GST rate.

"This is completely unacceptable. I have instructed the relevant departments to step up their enforcement efforts to ensure that any increases introduced by shopkeepers and business owners are in line with the 6% GST rate, and that any abuses of this system which negatively harm the consumer are brought to a halt."

- TMI