GST saved Malaysia, says Najib

KUALA LUMPUR (Jan 8): Datuk Seri Najib Razak today again defended the implementation of the goods and services tax (GST), saying it saved Malaysia in the face of a very challenging economic environment.

The prime minister said the introduction of the consumption tax in April last year had contributed to the country’s revenue.

“I can say that GST is a lifesaver to the government’s finances and the economy,” said Najib, who is also the finance minister, at a special gathering with Finance Ministry staff in Putrajaya this morning.

As of December 2015, the projected net collection of GST amounted to RM27.126 billion, out of the gross proceeds of RM37.67 billion.

It is estimated that net proceeds of GST will increase to RM39 billion this year.

According to Najib, the tax benefitted the nation because from a microeconomic standpoint, it helped sustained the country’s revenue decline due to the global drop of oil prices.

Describing 2016 to be a more challenging year, Najib said Putrajaya expect revenues from petroleum to shrink further.

“Oil prices are expected to remain low in 2016. The decline in terms of government revenues, are estimated at more than RM30 billion.

“But if it (oil price) remained at US$32.35 or US$36 per barrel, the depreciation will be over the RM30 billion mark,” he said.

Najib also said that if the GST was not introduced, Malaysia’s budget deficit would go up to 4.8% in 2016.

“Fortunately, we have the GST, if not, the deficit will increase to 4.8% instead of 3.1% in 2016,” he said.

Najib added that GST has also helped the government to continue with people-centric development and those in need through 1Malaysia People’s Aid (BR1M).

“How can the government implement development projects such as building of roads, hospitals, schools, and provide assistance to the people if we did not have enough revenue,” he said.

GST was introduced in April last year and has been criticised as a cause of the increase in the prices of goods and higher cost of living.

 

@theedgemarkets.com – GST saved Malaysia, says Najib