A Critical Review of Bhupinder Singh, B (March 7, 2010), ‘Introduction of GST in Malaysia – Short and Long-Term Impacts’, Tax Guardian Quarter 2. 1.0 Introduction
In this article, Bhupinder Singh is evaluating the short-term and long-term effect of implementation of Goods and Services Tax (GST) in Malaysia based on the experience of other countries like Australia, Singapore, Canada and so on. GST is known as Value Added Tax (VAT) is a broad-based consumption tax levied on goods and services. Bhupinder Singh concluded that there is hardly a definite way to evaluate the short-term and long-term impacts of the introduction of GST in Malaysia. The advantage of GST is that it only charges on the final supply to the end consumer. Besides that, GST will be replacing the existing service tax and sales tax, thus, it will cause those taxable items to become cheaper. However, there’s still has disadvantage of GST, that is, there will have large number of goods and services which are free from tax will be burdened with GST.
In this article, Bhupinder Singh mentioned that GST is designed to not be a cost, but a tax which is recoverable and should not be passed on to the next consumer in the supply chain. GST will replace both service tax (5%) and the sales tax (5% and 10%), theoretically should result in reduction in the price of taxable items. However, the author also mentioned GST is regressive tax where it is charged more towards the poorer consumer as GST tax supposed to be imposed on basic goods and services rather than essential items. Thus, some basic items have identified to be free from the burden of GST by government.
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