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Economists differ over Mahathir’s plan to end GST

 | October 20, 2017

Two economists have contrasting views on former prime minister Dr Mahathir Mohamad's suggestions on abolishing GST without affecting govt's revenue.

Mahathir is right in proposing a review and improvement of our tax policies, says Ramon.

Mahathir is right in proposing a review and improvement of our tax policies, says Ramon.

PETALING JAYA: Dr Mahathir Mohamad’s suggestion that the goods and services tax (GST) could be abolished without affecting the revenue of the government has merit says prominent Malaysian economist Ramon Navaratnam.

However, despite agreeing with the former prime minister’s suggestion, he also said that the GST is a useful source of revenue.

“GST has been adopted widely all over the world. However, Mahathir is right in proposing a review and improvement of our tax policies.

“He is right to suggest the review of the administration and to optimise the country’s revenue collection,” the former senior civil servant told FMT today.

Ramon, who had served as the Treasury deputy secretary-general, said our expenditure policies and practices can be made much more efficient by cutting out any leakages and wastage.

“With that, we will have good governance and our economy will progress more positively. The national debt will also decrease and greater financial stability will be ensured while our ringgit will recover and strengthen.

“This is sound economic planning. It will have a favourable impact on also lowering our cost of living that has risen,” Ramon said.

He added that he was sure that Prime Minister Najib Razak was aware of the matter and will address it during the tabling of Budget 2018 next week.

“Najib is no doubt fully aware and he will hopefully reflect these basic economic principles in Budget 2018.”

Hoo says Mahathir's suggestions are "irrelevant".

Hoo says Mahathir’s suggestions are “irrelevant”.

Giving a contrary view, however, was veteran economist Prof Hoo Kee Ping who said Mahathir’s suggestions were “irrelevant”.

“We do not have to talk about his suggestion because the country was in a worse economic shape when he was the prime minister.

“He is talking like an expert but he fails to look in the mirror and see some of the economic measures he implemented that were disastrous to the country,” Hoo said.

Hoo told FMT that Mahathir must first address scandals and economic decisions during his time before he mouths off on the current prime minister.

“He should talk about how much he lost in the Bank Negara scandal. As the boss, please don’t use the excuse that you did not know what was happening.

“Talk about the failed Multimedia Super Corridor project (MSC Malaysia), how much he paid his cronies through the privatisation of 289 projects during his time.

“Ask him to talk about Proton and Perwaja. How much money did the country lose there?”

In a blog post yesterday Mahathir said the reason Najib had imposed the GST is because the government had mismanaged government funds simply to gain popularity.

The Pakatan Harapan chairman said if the government were to be prudent in the management of government funds, there should be no shortages, and new taxes could be avoided.

Mahathir outlines how GST, handouts can be dropped


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