Saturday, May 18, 2013

GST implementation to add up to RM27b to Malaysia's income

Minister in the Prime Minister's Department, Datuk Seri Idris Jala says GST will provide extra funds for the government to spend on the well-being of Malaysians.

Malaysia will be able to rake in an additional income of up to RM27 billion if the proposed goods and services tax (GST) is implemented at seven per cent, similar to neighbouring Singapore.

Minister in the Prime Minister's Department, Datuk Seri Idris Jala said the new taxation mechanism can guarantee additional revenue of RM20 billion to RM27 billion, at maturity.

"At maturity, is when, every Malaysians starts to contribute towards the GST. It must be implemented as soon as Malaysians are ready to accept the mechanism," he added.

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Speaking at the forum, "GE13 - What it means for business?" here today, Jala said education on what the GST is all about and how it benefits the country's economy is very important, as well as for Malaysians to understand and accept the taxation mechanism moving forward.

He also said the GST will provide extra funds for the government to spend on the well-being of Malaysians, according to what was promised in the Barisan Nasional's manifesto, before the 13th General Election.

"Even though a new tax is being introduced, Prime Minister Datuk Seri Najib Razak had committed to reducing corporate as well as personal income tax.

"This shows that the government wants a balance in every move that it makes, whether economically or politically," said Jala, who also heads the Performance Management & Delivery Unit (Pemandu).

Meanwhile, he denied claims that the pre-election promises made by the government, will increase the debt to gross domestic product (GDP) ratio, from the current 53 per cent.

He said the government is committed to maintaining its debt at well below the 55 per cent debt to GDP ceiling that it had set before this.

"At the World Economic Forum in Davos, when I proposed this Malaysian mechanism of keeping 55 per cent as a ceiling for debt to GDP, many world economists and leaders said it was impossible.

"This is because Malaysia is very unique for still having its debt below 55 per cent," Jala said, adding, as examples countries such as Singapore (100 per cent debt to GDP ratio), United Kingdom (80 per cent) and France (81 per cent).

While claiming the 2020 high-income nation goal can be even achieved two years earlier, due to extensive government and private sector economic efforts, Jala said Malaysia is on track to report a budgetary surplus by 2020.

He said for the past four years with Najib as premier, the country's budget deficit had shown significant decrease year-on-year, and gave an assurance that the track record would continue.

"Last year, it was 4.5 per cent, and this year we expect it to decrease to four per cent. With all the efforts being taken, I am very sure the day will come when we can report the budget surplus." he added.

On the government's role in business, Jala said it would gradually move out of more businesses this year and in the future.

Through the Government's Role in Business (GRIB), he said the government had already pared down or even phased out its stake in 13 companies, from the 33 entities identified by Pemandu to do so.

"We are having monthly meetings on this chaired by the prime minister and attended by all the related company chiefs.

"The government intends to exit its role in business. But it can never be done in one day. There will still be businesses that the government has a role, due to the importance of it in the daily lives of Malaysians," Jala added

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