Are the poor to be penalised with the Goods and Services Tax (GST) just because high-income earners are evading payment of income tax?

Labour rights group Jerit posed this in response to Prime Minister Najib Abdul Razak’s statement that the GST is needed because only 10 percent of the workforce are now paying income tax.

He had warned that the nation would go bankrupt if the GST is not implemented.

However, Jerit disagreed, accusing Najib of peddling a “big lie”.

Blaming the people, it said, is a smokescreen to cover up administrative weaknesses.
               
“In Malaysia, around 80 percent of the people are in the low-income bracket and do not need to pay income tax,” it said in a statement.

“This is not because they do not want to pay, but because they cannot afford to do so and do not fall within the taxable category.”

Furthermore, over the past 10 years, there has been no real increase in wages, it noted.

“The Minimum Wage Act enforced this year (provides for) RM900 (a month). For urban areas, this is below the poverty line. At the same time, the price of essential goods (has increased sharply).

“The reduction of subsidy for RON 95 petrol has led to an increase in the price of essential goods, and subsequently (higher) living costs. Implementing the GST would only burden the people further.”

If the government wants to increase the revenue base, said Jerit, it should ensure that those in the taxable brackets pay up. Alternatively, the quantum of corporate tax should be increased.

“Since the 1980s, the government has reduced corporate tax from 40 percent to 24 percent (currently). Is it the government’s policy to defend corporations while burdening the people?” it asked.

Jerit also pointed out that the nation’s soaring debt is a result of corruption, wastage and leakages as highlighted in the Auditor-General’s Report 2012.

“Why aren’t measures being put in place to arrest this, instead of opting for a shortcut (in the form of) the GST?” it asked.