Muhyiddin Yassin and other ministers say the government conducted a thorough study before calling for its implementation.
“Remember, it’s not an additional tax. We are removing the Sales and Services Tax and replacing it with the GST,” said Muhyiddin, at a press conference after the budget speech at Parliament.
Earlier, Najib announced that the government would introduce the GST on 1st April 2015, starting at a 6% rate.
The new tax system would replace the Sales and Services Tax, which the government claimed is flawed as it involves double taxation to the masses.
Muhyiddin said the rakyat need not worry about the GST as goods such as rice, sugar, flour and other essential items would be exempted from the new tax.
He said that the government had conducted a thorough study on the matter.
Commenting on a separate issue, he said that the additional funds allocated under the Bantuan Rakyat 1Malaysia (BR1M) would help ease the rakyat’s burden.
“In addition, the government will also restructure the income and corporate tax with the coming of GST. Personal income tax will be reduced between 1 to 3 percentage points,” said the Pagoh MP.
Whether the government would compel employers to raise wages post GST, Muhyiddin replied in the negative saying there was no law to compel employers to do so.
“We leave [it] to the employers’ discretion. We cannot force them as there are no laws to do so. But we think that should not be the case as it will be a burden to the employers,” he said.
Summarising his views on the budget as a whole, Muhyddin said that the budget would further strengthen the nation’s economy and improve Malaysia’s sovereign rating.
“The bold moves initiated in the budget will give confidence to both domestic and international investors to our nation.
“In the long run, the people will benefit from all this,” he said.
Second Finance Minister Ahmad Husni Hanadzlah commented that the GST may cause inflationary pressure on some sectors in the initial stage, but the impact would be minimum.
“We have studied the matter thoroughly. The effect will be minimum. Besides, essential goods are exempted from GST,” he said.
Husni also said that his ministry had conducted a thorough study on how to implement the GST, from nations who are already imposing the tax system in their respective countries.
Whether 6% is good start for the GST, Husni said, “ We feel it is the right figure. It will benefit the government and the people.”
When asked whether the new 30% rate for Real Properties Gains Tax (RPGT) would affect the property market, Husni said the government felt the rate was reasonable.
“We will have to wait and see. There are lots of speculative activity in the property market but we feel 30% is reasonable,” said the minister.
FMT were also able to get the response of other Barisan Nasional leaders regarding Budget 2014:
Youth and Sports Minister Khairy Jamaluddin:
“ I see a lot of allocation given to the my ministry which will definitely benefit the youth, especially in terms of training and entrepreneurship programmes for youths.
“As for the GST, I can foresee some increase in price in the beginning but in the long run, it will be the best [way] to reform our taxation system.
“ I feel the 6% rate is reasonable as the inflationary pressure (upon implementation) will be moderate and increase the government’s revenue.”
Minister in the Prime Minister’ s Department Abdul Wahid Omar
“It’s a very comprehensive and a good budget. The government’s commitment to reduce our fiscal deficit from the existing 4% to 3.5% also shows that it is a responsible budget.
“On GST, there are lot of misconceptions about it due to misleading statements issued by the opposition. The new tax is implemented to replace the Sales and Services Tax.
“The 6% rate for GST is one of the lowest in the Asean region and the lowest in the world.”
Pulai MP Nur Jazlan Mohamed ( Public Accounts Committee chairman)
“The 6% rate for GST is a good start but there is a need to create awareness amongst the public on the matter.
“As for the abolishment of sugar subsidy, it’s long overdue. Hopefully, it will encourage people to consume less sugar.”