GST and Our Economy

All,

Recently, our Prime Minister Najib Razak announced a very unpopular move of introducing Goods and Services Tax (GST) in our country in his budget speech, which is scheduled to be implemented nation-wide beginning 1 April 2015.

There are many noises and brouhahas coming from two sides of the political divide - the right and the left wing.

However the noise may sound, I am all for GST. I will not argue much on why we need GST, but I will say only this - however unpopular it is, we need them to save our economy. Our ailing debt that is ballooningly high.

Let's be real: our debt-to-GDP ratio is speculated to hit 54.8% by year end, and some sort of measures must be taken to reduce thia percentage.

While GST is NOT the only measure it will nevertheless increase government's coffers in terms of revenue. That should at the very least, reduce our public debts.

Of course there are many other economic theories that could justify to support GST, but I am not economist. I don't intend to be one, but I leave it to the expert to explain it to the rakyat (citizens) on why we need a GST.

The introductory rate of 6% is fair to me, although I was hoping that it should be 1% lesser. But nevertheless, it is an experiment, and it is the duty of the government to explain on the many benefits that can be reaped from introducing this GST system in our country.

Many economists and practitioners have written and argued for the case of GST. It is a necessity and any delay will only affect our economy.

GST is introduced to broaden our country's revenue and the same time -- hopefully -- will reduce our public debts.

Below is one such good article that defends the need for GST in Malaysia. It is an excellent article written in a very simple language for all the layman to understand.

On the other hand, the present government must also implment some other measures to reduce excessive leakages in our public finance system.

The first two steps to be taken are:-
(a) address all queries and issues in the latest Auditor-General's report, and
(b) introduce few economic initiatives to transform our public expenditure and finance systems.

This is my two cent's worth of unqualified economic opinions.

Image source: The Edge Weekly, Issue #987, Nov. 4th - 10th., Page 59.