by SHAHEERA AZNAM SHAH/ pic by TMR FILE

THE government should reintroduce the Goods and Services Tax (GST) at a zero rate to tackle the revenue gaps in other domestic industries, said Malaysia Institute of Economic Research (MIER) chairman Tan Sri Kamal Salih.

Kamal said it is better to reintroduce the GST at a zero rate before setting a 3% to 6% rate for implementation in the future.

“Reintroducing GST could close the financial gap. It could be introduced at a lower rate and complement it with subsidies at the other end to support the businesses.

“We have been proposing it since 1988. When the oil prices were deeply plunged, the GST kept the government afloat,” he told reporters at the signing of memoranda of understanding (MoUs) under MIER’s “Crouching Tiger Research Plan” in Kuala Lumpur yesterday.

Kamal said it is estimated that Malaysia lost up to RM22 billion in revenue when the government brought back the Sales and Services Tax (SST) last year.

“(GST) revenue will be higher than SST, while there is talk of introducing the Capital Gain Tax as companies are making millions without it.

“GST is a fair system. Some say it is regressive because the poor will be affected, but we have the exclusion clauses that protect the lower income,” he said.

According to him, MIER also anticipated that the government will introduce stimulus packages in the upco-ming budget to entice capital flow into the country.

“The government needs to introduce the stimulus packages. Otherwise, it will be stuck with 3.4% deficit of GDP this year.

“Those (foreign) investors must be incentivised to bring their foreign capital into the country. Some might say they are more than RM1 trillion, which is equivalent to our debt,” he said.

MIER expects there will be an increase in the development expenditure for the upcoming financial tabling. “I think there will be some increase in the development expenditure which has been reduced over the years.

“A lot of it went to operating expenditure. Perhaps the deployment of civil servant through corporatisation is necessary so that the public service could become more efficient,” he added.

The government, he said, might raise the quantum of Living Assistance programme (BSH) as it is gearing up to stabilise Malaysia’s standard of living.

“Our anticipation is that the government needs to deal with the cost of living. I have some inkling that they will strengthen BSH through raising its quantum and the number of beneficiaries. They will probably widen the coverage, maybe up to the bottom 50% income group,” he said.