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Spend tax revenue wisely By MYOCHO KAN

Publish date: Thu, 30 Jun 2022, 09:33 AM

LETTERS: People should not fear tax but should abhor the misappropriation of tax income. Corruption aside, wastage of taxpayers' money is a serious issue in Malaysia.

The Goods and Services Tax (GST) should not be looked at in isolation but holistically in terms of correlation to cost of living and ease of doing business.

Conducting business in Malaysia is expensive as every ministry, council, agency and department wants to stick its hands into the honey pot, not to mention the lengthy e-bureaucracy hiding behind the veil of technology, delaying almost every aspect of government-related processes.

Stamping a document manually at the Inland Revenue Board office can be done within an hour but it takes seven days to do it electronically. Probably more days would be wasted if it is rejected! 

Or how the same wellness training programme that covers spa, facial and massage is under the jurisdiction of three ministries — Health, Tourism, Culture and Arts and Human Resources.

Another issue is that GST should be placed under the purview of the Finance Ministry instead of the Customs Department.

The Customs Department's jurisdiction is very much limited to border control of goods and people, and related activities. It does not have a macro jurisdiction like the Finance Ministry, specifically under the Inland Revenue Board.

Under the Finance Ministry, the tax and disbursement regimes could be matched and connected seamlessly, for example, refunds could be expedited with a stronger verification system between GST collection and tax returns.

Moving forward, it is myKITA's opinion that:

GST should not be implemented now when the people and industries are pressured and still coping with inflation, currency devaluation, post-Covid-19 normalisation and global uncertainties.

GST should be implemented from 2024 onwards when the commerce and industry sector has strengthened its economic position.

AN IRREVERSIBLE mechanism needs to be put in place to ensure that GST is sustainable.

THE GST rate should be reduced to three or four per cent. That will yield more than the SST income minus the psychological direct tax impact as it has been tapered off at every input-output tax level along the supply chain.

THE operationalisation of GST should be simplified. A broad definition of exemption needs to be put in place with specific criteria rather than product type base.

THE reintroduction of GST should concide with the abolishment of "unfair" taxes such as the windfall tax to reduce the total tax impact and regain the confidence of foreign investors.

Besides that, the GST income should be spent on:

DEVELOPING and empowering the five national engines of growth (EOG) driven by competent and professional human capital and enabled by Fourth Industrial Revolution — finance, manufacturing, construction, retail and business support (for example, tourism, logistics and professional services) and agriculture.

RESEARCH, development and innovation that can correlate to feasible economic yield in the five EOG. For example, to boost agriculture, the government must drive product innovation through scientific alternatives in tandem with the environmental agenda.

DEVELOPING human capital with focus on the future rather than traditional skills, and ceasing mega infrastructural projects that result only in heavy cost of maintenance and depreciation.

INCREASING food security through supply chain rationalisation and empowerment. Planting own vegetables and rearing own fish and chicken are not food security.

Remove all economic parasites such as approved permits and unproductive permits and policies at the upstream level, and encourage sustainability via scientifically and technologically based market diffusion at the downstream level.

PLOUGHING back a certain percentage of the GST income into the financial sector is critical to cushion the currency-exchange differentiation.

EMULATE Singapore as a global financial hub. This means developing human capital with such capacity at the education level is pivotal.

INTRODUCE special reliefs and fiscal encouragement for strategic investment and reinvestment. Probably a proxy-investment relief in counterpart or collaborative countries can be an innovative solution in leveraging competitiveness.

In summary, the issue here is about how the tax income is spent. And, above all, we need professionals and not politicians in the government to realise the dream.


President, myKITA, Centre of Integrity, Professional Governance and Advancement

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