Should the GST be reintroduced
By Hafidz Baharom
If there was one misstep by the Pakatan Harapan government, it was the removal of the Goods and Services Tax (GST) and the abolishment of its entire infrastructure in Malaysia. For one thing, it generated a lot of revenue for the government.
However, we must also admit that the rebates from the tax was dealt so slowly that saying it was inefficient would be a misnomer. If anything, the word unreliable, delayed, and the phrase “what do you expect from the Malaysian civil service” comes to mind.
The GST is a good tax system, provided that you had enough of a welfare system to assist both the low and middle income groups, and that companies got their rebates on time. In both provisions, the Najib administration was found wanting.
Thus, before even thinking of reimplementing the GST, there are a few things that need to be fixed – namely reforming the Customs office, tiering the GST to suit meaningful goals, planning a proper safety net for both the lower and middle income groups, and increasing Malaysian incomes to the point that the tax will be bearable for both the rural and urban poor.
The reforming of the Customs office needs to be done to increase its efficiency so that GST repayments and rebates are done up to the month. Having millions unpaid arrears was a failure of the system itself, but it really should be asked of the Customs department – what happened, and how did it happen?
If the true issue was that somebody asked for corporate cash held back to fund some kind of government projects when it was supposed to be paid out, it would have been a breach of ethics if not the law itself. In fact, should we come up with a new law, the government should be held liable for late payments of rebates and arrears for the GST.
The law should be fair to both sides, shouldn’t it? Just as it should allow government to collect revenue, it should not be to the point that government is negligent of its fiduciary responsibilities to taxpayers – this should include returning the GST rebates.
The second thing that needs to be looked at, would be tiering the GST to suit meaningful goals – what goals does government want to push forward. This is where government can actually be selfish about most things.
For example, a full rebate for “Made in Malaysia” products on top of the zero tier for essential goods. Maybe even a zero tier on sexual health products and items such as tampons and sanitary pads to help women and families bear the cost. Heck, maybe even push for birth control to be in the same segment to help with family planning.
A 5 percent tax on products with excessive sugar, regardless of it being chocolates or beverages, to encourage a healthy lifestyle. A 1 percent tax on diesel and petrol, to encourage energy efficient vehicles, lower emissions, and taking public transport.
Maybe even an 8 percent tax on luxury consumer products and such which the government does not want people to buy in excess.
The third item that needs to be looked into is a proper safety and welfare net to assist the lower and middle income groups. To this point, we need to face some hard facts. First, Malaysians are underpaid and the only way to correct that is to push the minimum wage up to a decent level.
To this end, the only way to do it is to tie it with the parliamentarians gross salary, inclusive of their allowances. Perhaps set the lawmakers salary at 3 times that of the minimum wage?
Taking such an example, the minimum wage if a parliamentarian gets RM10,000 a month would be RM3,333.33. And there should be no exclusion whatsoever of any sectors, not even the plantation sector.
Yes, inflation will skyrocket to the point that it becomes insane for a brief moment, before levelling out and normalising for everyone. Yes, companies will raise their prices, some might even take to automation (finally) and some might go to the Federation of Malaysian Manufacturers (FMM) to the tune of violins, and the Malaysian Employers Federation (MEF) might even form a blockade over Naboo and start the rise of the Sith.
But it works out in the end for the betterment of all, especially since the government should tie in it’s welfare plan to half of the minimum wage.
Tying lawmaker wages to the minimum wage which is then tied to the monthly welfare payments for those in dire need of assistance, will eventually lead to the same plan altogether – a partial universal basic income (UBI) plan for those earning under the upper level T20 income group.
That should be the end goal within 5 years of implementing the GST, perhaps even with a target group of two areas in Peninsular Malaysia, Sabah and Sarawak – one urban and one rural respectively in each of these – to begin the experiment within the third year of GST implementation.
And finally, the tax should be bearable to both the urban and rural poor. The way I’m envisioning this plan is by increasing the base income of all groups except the T20. However, there should also be further conditions to set – providing universal healthcare, upgrading public housing projects, establishing community allotments in rural areas and urban edible gardens for those who need it or want it.
The one item I won’t touch on in this list is timing. The reason for that is simple – there won’t be a proper time to implement it any time soon. The world is currently suffering a pandemic, nation’s are struggling to cope including ours, and introducing a new consumer based tax system in the era of a pandemic where people are financially struggling feels way off.
But once a recovery is seen, or a normalisation of the process, or even when a government is elected that won’t care if it gets kicked out of office in five years time is elected – it would be the perfect conditions to implement this again and equalise society as a whole.