ASEAN KEY DESTINATIONS
Tax Deferment Right Thing To Do
The postponement is the right thing to do, as people are not well informed and educated about the changes and implications of the GST, said AmResearch in its economic update.
It believed the new time frame could be some time around 2012 when the economic environment was more stable and conducive.
The research house however said it welcomed any move to streamline the taxation system in Malaysia, moving towards a competitive economy to woo more foreign direct investments, the key to attain high-income economy and developed nation status by 2020.
AmResearch hoped the government would introduce a relatively low-rate GST at around 3 percent, while personal income tax and corporate tax rates should be reviewed and made more competitive vis-a-vis the percentage in the region.
Critically, there must be a strong political will to implement the unpopular consumption-based tax and the key was to set a clear and credible GST roadmap to ensure its smooth implementation, it said.
The government had planned to introduce the GST at a proposed 4 percent rate some time early next year but announced its postponement yesterday.
OSK Research said the GST postponement raised the possibility of an early general election next year.
While it expected an election happening possibly in the second half of next year after the Sarawak state election in early 2011, it noted that three of the last four general elections were held in the first four months of the year.
Similar to the political sensitivity surrounding the GST, it believes issues such as subsidy reduction and tariff hikes may also be delayed until after the general election.
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