The postponement of the contentious proposal for a goods and services tax (GST) has drawn differing opinions between members of parliament from both divides over whether the decision was a well-timed political move or a matter of practical consideration.
In an unsurprising move, the Ministry of Finance announced last Wednesday, Oct 13 that the postponement of the GST to a later date to enable “inclusive” engagement with all segments of society over the matter.
DAP’s Charles Santiago said the next day the government’s announcement was likely a way to prevent the GST from becoming an election issue, given that there are impending by-elections for the Galas state seat in Kelantan and Batu Sapi parliamentary seat in Sabah.
Also on the horizon are the Sarawak state election which must be held before June 2011 and swirling speculation of general elections being held sometime next year.
Santiago (Klang – DAP) said: “But all said and done, it will continue to be an election issue. The government is actually just marking time”.
The GST delay also sends yet another message to investors that the government is unable to make hard decisions and had “no political clout”, Santiago said when met in parliament’s lobby.
Charles also opined that the business community, particularly the small and medium enterprises (SMEs), was largely unprepared for the implementation of GST.
The government is probably addressing this issue by having more consultations and capacity building programmes to ensure that the SMEs would be able to cope when the GST is implemented, Santiago added.
PAS central working committee member Dzulkefly Ahmad said that if it were true that the government wanted more time to study the GST and obtain feedback then the government should table the proposed GST bill in Parliament.
“Table the GST bill so members of parliament from both sides of the political divide can iron out the proposal,” said Dzulkefly (Kuala Selangor – PAS).
Dzulkefly said that the opposition were not merely rejecting the GST in totality but wanted to be sure that the GST imposed would not burden to the people and that there would be structures in place to curb leakages and abuse of government spending.
According to Dzulkefly, there had appeared to be a legal infrastructure in place for the contentious GST with the recent tabling of the Competition Act and the Price Control and Anti-Profiteering Act.
“But when they suddenly announced that the GST would be postponed, it is difficult to read anything else apart from political considerations behind the decision,” Dzulkefly said.
However, Barisan Nasional (BN) politicians were quick to dismiss suggestions of political play with regards to the delaying of the GST.
Former Domestic Trade and Consumer Affairs Minister Datuk Seri Shahrir Samad, when met in Parliament’s lobby, said it was positive that the government was seeking more discussion and communication with stakeholders over the GST.
“The GST can be implemented painlessly provided there was a sufficient communications plan and a proper implementation plan,” said Shahrir (Johor Bahru – BN).
Shahrir also suggested that the GST could be implemented first in the modern retail sector and eventually broadened so “the rest can see there’s no cause for alarm”.
The issue at hand was how to roll out the GST without causing price increases across it board, Shahrir said.
Minister for Domestic Trade, Co-operatives and Consumerism Datuk Seri Ismail Sabri Yaakob also agreed that it was necessary for more engagement with stakeholders before the government proceeded with implementing the GST.
Ismail said his ministry would only play an active role once the GST was implemented and would be monitoring prices to ensure that trades would not “raise prices using GST as an excuse”.
Ismail (Bera – BN) pointed out that the government had already tabled two proposed legislation – the Competition Act and the Price Control and Anti-Profiteering Act – which would precede the GST.
On whether the small and medium enterprises (SMEs) were ready for the GST, Ismail said, “I think they are not ready that’s why we have delayed the GST”.
To questions, Ismail also dismissed suggestion that the delay of GST reflected a lack of political will by the Barisan Nasional (BN) federal government.
“If we go ahead with it, they’ll make noise and say we are burdening the people. If we don’t proceed, they will say we lack the political will,” Ismail lamented.
To recap, the GST bill was first tabled in Parliament last December, proposing a tax rate of 4% with targetted implementation in the middle of 2011 (18 months after the bill’s first reading).
The bill was also lined up for second reading at the Dewan Rakyat during the current session which is scheduled to meet until Dec 15.
The GST bill had also proposed exemptions for essential goods such as certain agricultural products and basic food items as well as exemptions for companies with revenue not exceeding RM500,000 per annum from charging GST.
