Introduce GST when economy is strong: PwC

UALA LUMPUR: Malaysia should introduce the Goods and Services Tax (GST)
now as the country was still enjoying a fairly strong economic growth.

Wan
Heng Choon, Senior Executive Director, PricewaterhouseCoopers Taxation,
said while Malaysia was still enjoying reasonable rates of growth and
bringing its budget deficit under control, now would be the best time
to introduce the tax.

He said there were calls for the GST to
be implemented after a grace period of at least 12 to 18 months after
it was announced and there were concerns that the tax would cause
inflation.

"In this respect, there must be a commitment to
assist the lower income group. There is a need to make the tax simple
to understand," Wan said during a Budget 2013 briefing.

Meanwhile,
Jagdev Singh, Senior Executive Director, PricewaterhouseCoopers
Taxation, said Malaysia's economy remained positive but highly
uncertain and this fits into the global picture in tandem with the
uncertainty caused by the Eurozone debt crisis, mixed but generally
weak economic growth amongst advanced nations and slowing growth in
Asia.

Jagdev said there are a number of challenges in the Malaysian economy such as managing the fiscal deficit.

"The fiscal deficit has been running for the 15th straight year," he said.

"What is important now is to bring it down to something more manageable," he added.

Jagdev
said the government's target to reduce the deficit to three per cent by
2015 is achievable, helped by the government's revenue growth.

In this respect, he said the government's direct tax for 2012 will likely increase 10 to 15 per cent from the previous year.

"The target of three per cent is achievable but the government needs to put in some measures to control cost," he said.

The
other factor that will have major impact on fiscal deficit, he said,
was subsidy, which accounted for almost 20 per cent of governnment
spending.

For instance, the fuel subsidy was estimated at RM20 billion last year.
-- BERNAMA