Shadow budget comments

Goods and Services Tax (GST)

Reintroducing the GST will generate more revenue for the government. Even if set at 3 percent, an estimated revenue of RM16.5 billion would be worth it.

However, it would have been better off if the shadow budget had recommended a tiered GST system instead. For those who can recall, the previous government had an issue beforehand of introducing 66 new items which were exempted from GST which could be considered luxury goods. Swordfish steaks and frozen imported vegetables were among the items on the list.

A tiering of the GST would have allowed the government to go line by line and analyse what items were consumed as necessities, and what reflected lifestyle choices.

As Tony Pua once said the B40 don’t buy Coke, it would be clear that the snide remark was in fact a reflection of a lifestyle consumption choice rather than a necessity.


Soda Tax

No. If anything, Malaysia needs to reconsider it’s diet for sure, but a soda tax is not the way to go. Carbonated beverages are only the fourth largest drink consumed for Malaysia – tea and coffees take the top two.

As such, a sugar tax on canned and bottled beverages would be fairer to businesses as well as consumers looking to make a healthier choice.

After all, retailers have started including non-sweet canned and bottled drinks for both teas and coffees as an alternative to avoid the tax hitting consumers.

A detail to consider would be the sugar content – what is healthy and what is not? To allow sugar taxation, such a level needs to be set, with anything in excess taxed. This would be a fairer taxation system to all.

Plus, it will also exempt the food and beverage industry that mixes their own drinks to serve. However, higher retail outlets may want to push consumers to offset the tax, rather than absorb it themselves.


Remittance Tax

This was an idea worth reconsidering, but it also gives concern that it may be xenophobic. Yet, at the same time, it is a clear way to tax outflows from the country which would only apply to funds heading out rather than coming in for business.

While this has been proposed by economists before, setting a rate of 6 percent seems high especially when we are a nation relying on foreign labour – personally, it sounds as if we wish to further exploit foreigners from the fruits of their labour.

At the same time, it would allow the government to further track illicit outflows of cash – and that makes more sense than a capital gains tax which would impact Malaysian nest eggs.


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