PETALING JAYA: While Malaysia’s opposition has set its sights on going against the goods and services tax (GST) in the lead-up to the 14th general election (GE14), governments across Asia are introducing a similar policy in their countries to boost reliance on consumption levies, a report said today.

The South China Morning Post (SCMP) said India, Saudi Arabia and the United Arab Emirates (UAE) had recently implemented such a tax, while several other countries in the Middle East are scheduled to introduce it next year.

Singapore, whose GST rate is 7%, is expected to raise it further in the government’s budget statement in February, it added.

The report said India’s move to impose the GST in July last year to unify the US$2 trillion (RM8 trillion) economy by abolishing state and federal levies had been hit by IT glitches and a “convoluted” structure.

“One of the major grievance with India’s GST was its four rates, instead of the single slab in most OECD (Organisation for Economic Co-operation and Development) countries,” the report said.

Malaysia, which implemented the GST in April 2015, has only a single rate of 6%.

The SCMP report said Malaysia’s GST collections are expected to account for RM43.8 billion ringgit in 2018, making up some 18.3% of the country’s total estimated revenue of RM239.9 billion.

It cited PKR’s Kelana Jaya MP Wong Chen as saying that if elected Pakatan Harapan (PH) would immediately reduce the rate to 4%, while targeting to completely abolish it within one year.

“Rather than focus on the GST, what we urgently need to do is get rid of the leakages and raise incomes levels so we have at least half of the population paying income tax,” he was quoted as saying.

Wong added that he was hopeful frustration over the GST would translate into support for the opposition.

“Cost of living and the GST is the number one issue on the minds of the economic voters in the rural areas, more so than the 1MDB issue, which is more complicated,” he claimed.

Meanwhile, Saudi Arabia and UAE introduced the value-added tax (VAT), which is similar to GST, at a rate of 5% on Jan 1, within the framework of a unified agreement endorsed by the member states of the Gulf Cooperation Council (GCC).

Four other GCC countries – Bahrain, Qatar, Kuwait and Oman – have pledged to introduce the VAT in 2019, the SCMP report said.

It said the GST moves in the Asian economies were in line with prescriptions of the OECD to increase tax-to-GDP ratios.

“Consumption taxes are seen as a more robust way to deal with tax avoidance, as opposed to assessed taxes where taxpayers declare what they are supposed to be taxed on.

“Within the grouping, total government revenue from income tax fell from 30% in 1975 to 24% currently, while collections from consumption taxes rose from 13% to 21% in the same period,” it said.

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