Malaysia launches consumption tax despite public unease
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Malaysia last week implemented a six percent consumption tax aimed at plugging a leaky tax-collection system and addressing a widening fiscal deficit, but which has sparked opposition protests over the past year.
The government and economists say the Goods and Services Tax (GST) will help address an inadequate revenue-collection system under which income tax is currently paid by only an estimated 11 percent of registered companies and 14.8 percent of employees.
But the GST has prompted demonstrations by opposition parties, who say consumers were being left with the bill for government mismanagement of the economy.
Questions & Answers
Q.What is the primary objective of introducing the new consumption tax in Malaysia?
What is the primary objective of introducing the new consumption tax in Malaysia?
The Malaysian government has introduced the consumption tax to improve its tax-collection system, which is currently seen as inefficient. It also aims to tackle a growing deficit in the nation's finances by generating more revenue.
Q.What percentage of companies and employees currently pay income tax in Malaysia?
What percentage of companies and employees currently pay income tax in Malaysia?
Under the previous system, approximately 11 percent of registered companies and 14.8 percent of employees were estimated to pay income tax. This highlights the inadequacy of the former revenue-collection method.
Q.What is the public and opposition's main concern regarding the new Goods and Services Tax?
What is the public and opposition's main concern regarding the new Goods and Services Tax?
Opposition parties and the public have protested the GST, arguing that consumers will bear the financial burden. They attribute this to what they describe as government mismanagement of the economy, leading to increased costs for ordinary citizens.
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