Political Managements and Policies in Malaysia
An Exploratory Study of Goods and Services Tax
Awareness in Malaysia
K. Saira, M. A. Zariyawati & L. Yoke-May
Tax has been recognized as one of the main sources of governments’ income. Goods and Services Tax (GST) is an example of tax that contributes to the governments’ income. is tax has been implemented in many countries such as Canada, Australia and New Zealand. GST is a tax imposed on the sale of goods and services. In recent years, this issue on GST has been raised by the Malaysian Government as an approach to reduce its defi cit. However, the Malaysian Government is still fi nding the right time to implement GST as they are still conducting studies on the social impact of GST. is study attempts to investigate Malaysian awareness towards the upcoming of GST implementation.
Keywords: Goods and Services Tax (GST), Awareness, Malaysia. INTRODUCTION
Fiscal policies are being adopted by governments across the world in order to infl uence their country’s economic condition. ! e government has a choice of either to use expenditure or revenue collection in implementing these policies. ! e purpose of this implementation is to solve the economic problem (infl ation or employment), thus, increasing the country’s economic growth.
Seminar on National Resilience
Tax is a major contribution of government’s revenue collection in any countries, including Malaysia. In year 2008, statistics from the Ministry of Finance reveals that 66.7 percent of Malaysian government revenues were generated from taxes. Taxation in Malaysia is imposed by the federal legislation, passed by the Parliament. Since the introduction of tax legislation in Malaysia, there were numbers of changes made to this legislation. For example, changes in year assessment, implementation of e-fi ling, several changes in income tax rate and the latest changes was government’s intention to implement Goods and Services Tax (GST). ! is issue has been debated for several years in the Parliament. GST is a tax on consumption of goods and services to end user. GST is also known as value added tax (VAT) in other countries such as United Kingdom, Finland and Canada. GST has been implemented in more than 146 countries including Australia, Hong Kong and Singapore as part of their revenue. ! e range of the tax is between 5 percent and 24 percent. Malaysia has been immovable with fi scal defi cit for more than a decade. ! e budget defi cit accounted 7 percent of the country’s gross domestic product in year 2009 and the government is trying to reduce it to 5.6 percent by this year and lesser than 4 percent by year 2015. Due to the fi xed fi scal defi cit and declining revenue, the government has taken several steps to counter this issue, for example by ceasing unnecessary government expenditure. Another way to strengthened and stabilized the government’s revenue in the future was to propose the implementation of GST in Malaysia. ! e Malaysian Government has proposed a GST rate of 4 percent, which is a lower rate compared to the other countries. ! e Government aimed to implement this new tax scheme in the middle of year 2011. By doing so, they hope this will help to increase the economic growth in Malaysia.
Many questions, opinions and responses from various industries and consumer groups arose during the proposal of this issue while still being debated in the Parliament. ! ey are keen to know how GST will aff ect Political Managements and Policies in Malaysia
their interest, with some agreeing to it while some opposing to the implementation of GST. ! ose who oppose believed that GST will aff ect the price of goods and services, leading to price increase. ! is matter concerns especially the lower income bracket. However, the government has mentioned that GST is not a new tax. GST is actually a tax replacing the service tax that rate between 5 percent and 10 percent, which is higher than the 4 percent GST...
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