Let’s not delay GST’s re-introduction any longer

The Need for a Successful GST Regime

The debate continues on the goods and services tax (GST). In 2018, the biggest injustice to the continued wellbeing of the economy and the welfare of its citizens was perpetrated by the then opposition, which promised the moon and the sun to a rather naïve voting public who were also consumed by the unfolding of the 1MDB drama.

A Regressive Tax? Not Necessarily

An economist keeps on harping that the GST is a regressive tax. It all goes back as to how one manages it so that the poor are not overly burdened. It is, for all intents and purposes, a consumption tax based on spending patterns and widens the tax base, especially on businesses which have taken advantage of loopholes and indulge in tax avoidance. The country is robbed!

A Consumption Tax, Not a_regressive Tax

That is not denied based on the premise that the more you consume the more you pay as GST. A multitude of other economists are on record to say that its reintroduction should be better managed – namely, a lower rate at about 2% that will not shatter the lives of the poor.

Taxing at Each Stage of Production

The key factor of GST is that it taxes at each stage of production so that those who have benefitted from being below the tax radar and avoided paying tax due to transfer pricing and the like will now have nowhere to hide. No economist has challenged this assertion!

A Fair Comment

That the “burden” is passed to the customer is a fair comment – the more you consume, the more you pay in tax. It affects the wealthy. The poor have limited spending power and consumption patterns.

Operational Issues

Another problem on GST implementation that relates to delayed reimbursements on tax claims, especially to SME businesses, is an operational one. Some inept officers in the civil service, who still continue to be mired in strangling bureaucratic red tape, need to be taken to task. Surely, the reimbursement process can be sped up.

A Philosophical Look

On a philosophical level, the current unity government is compromised. They were the ones willing to sell their “soul to the devil” as it were to gain political advantage. The country had been held to ransom.

The Prime Minister’s Position

The prime minister has openly acknowledged that GST is both transparent and has clarity. In a similar vein, he also acknowledges that in the past he was not in favour of implementing the GST. Many years have passed and whatever the merits of GST reintroduction, any backtracking is an embarrassment to the earlier stance.

Conclusion

Let’s not delay GST’s re-introduction any longer. It is time for the government to revisit the GST regime and implement it in a way that benefits the economy and the country as a whole. The country cannot afford to continue with the current unproductive conversations.

FAQs

Q: What is the current debate around the GST?
A: The current debate around the GST is whether it should be reintroduced and how it should be implemented.

Q: What are the concerns about the GST?
A: Concerns include that it is a regressive tax, it will burden the poor, and it will lead to tax avoidance.

Q: How can these concerns be addressed?
A: These concerns can be addressed by implementing a lower rate of GST, widening the tax base, and ensuring transparency in the system.

Q: What is the current goverment’s stance on the GST?
A: The current unity government is divided on the issue, with some members advocating for its reintroduction and others opposing it.

Q: What are the benefits of the GST?
A: The benefits of the GST include a narrower budget deficit, a more efficient tax system, and a more level playing field for businesses.