MMA appeals for full claim on vehicle sales tax before
GST
KUALA LUMPUR, Jan 21 — The Malaysian Automotive
Association (MAA) has appealed to the government to
allow the industry to fully claim the 10 per cent
sales tax paid before the implementation of the
Goods and Services Tax (GST) on April 1.
President Datuk Aishah Ahmad said this was to ensure
a smooth transition to the GST regime so that the
industry could claim back their sales tax that has
been paid for car inventories prior to the GST
regime.
“Currently, STOCKS held by car
companies and dealers have included the sales tax of
10 per cent.
“But if the STOCKS were sold only after April 1,
they would have to bear the cost or charge their
customers an additional six per cent under the GST,
which will make car prices go higher,” she said. |
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Aishah said this in a
media briefing on the industry market review for 2014
and outlook for 2015 here, today.
Under the
current sales tax system, car companies and dealers can
only claim 20 per cent out of the total sales tax paid.
She hoped the appeal made since October 2014 would
receive a favourable reply from the Finance Ministry by
end of the month.
In addition, Aishah said the
weakening of the ringgit against other currencies was
also a concern as most vehicle components were imported
from overseas, even for those locally made vehicles.
Yin believes that economic conditions could sink as low
as 50% of the 2008 financial crisis, as Malaysia’s
trading partners such as China, Japan and the European
Union also go through a slow down. “Given Malaysia’s
trade dependency, things do not look good. If the
government signs on to the Trans-Pacific Partnership
Agreement (TPPA), our trade competitiveness will
worsen,” said Yin.
“Revising growth projections downward by at least a full
percentage point to between 4% and 5% would be a more
realistic position. This will also put downward pressure
on the debt-to-GDP (gross domestic product) ratio.”
The government's own target under Budget 2015 is GDP
growth of 5% to 6%, as well as to trim the fiscal
deficit of 3% of GDP by the end of the year.
When tabled last October, the budget of RM273.9 billion
in expenditure and RM235.2 billion in earnings was
pegged to OIL PRICES of around US$100 per barrel, even
though the price of crude at the time of tabling had
already fallen to US$90.
The price of oil now has dropped even further to around
US$50 per barrel.
Like Yin, independent
economist Azrul Azwa Ahmad Tajuddin is forecasting a
lower growth figure, of between 3.5% and 4.5% this year.
Azrul, however, does not think things will be as bad as
the 2008 or 1998 financial crises.
“In a
worst-case scenario, without prompt or adequate
government intervention, we may see a major slowdown to
sub-par growth trends of below 2% but still a marginally
positive GDP growth for 2015.”
But revised
projections on national growth figures are not what
people like Izwan and S. Guna will be looking at, as
they worry that higher inflation as a result of the GST
will hurt their business earnings, not to mention their
family’s monthly budgets.
“I know that the GST
is coming out in April but why is it that prices are
already increasing now? “My friend who wants to buy a
motorcycle now also say that the fees charged for it has
increased,” said Guna, a lawyer in Brickfields, Kuala
Lumpur.
Izwan, whose courier service operates
from Subang, said that although the price of oil is low,
this has not been translated into cheaper goods.
“The worse thing is when GST is implemented I would be
forced to increase my price which would cause my
customers to make noise…because they don't understand
the GST,” said Izwan who declined to give his full name.
Cut mega projects, not aid: Although Putrajaya
says the GST will help fill public coffers in light of a
decline in oil revenue, Yin and Azrul argue that the
burden it creates outweighs its benefits.
“Confusion about GST will likely mean delays in revenue
collection. It will also have a depressive effect on
consumption after it is launched meaning that businesses
will suffer more if global economic conditions worsen in
the second half of 2015,” said Yin.
Azrul said a regressive tax such as GST would only mean
less disposable income for low-income families at a time
when the economy is struggling.
Instead, Yin argues that seriously cutting wastage and
leakages in government expenditure as mentioned in the
Auditor-General’s report could lead to savings that
would dwarf the revenue from GST.
He also argues that if the budget for the bloated Prime
Minister’s Department is trimmed, the government could
free up funds in the double-digit billion range.
Programmes that could be reasonably cut are the
ideological seminars by Biro Tata Negara (BTN) and
Special Affairs Department (JASA), and the positions of
ministers and deputy ministers without portfolio, Yin
said.
Until OIL PRICES bounce back and the
ringgit strengthens, Azrul said the government should
also postpone big-ticket projects which require massive
capital and imported materials.
“I would expect
the government's responses to revolve around expenditure
control and containment, with serious commitment to
eliminate unnecessary, unproductive and ineffective
spending such as wastage, leakages and elements of
corruption.”
But prudent public expenditure,
they said, should not come at the expense of cutting
social services that can in the end help the economy.
“If OIL PRICES and growth both drop, the onus is heavier
on public spending to generate multiplier effects – that
is, to be be recycled back to the economy and boost
demand for goods and services,” said Universiti Malaya
economics lecturer Dr Lee Hwok Aun.
Aid for the
unemployed and the poor as well as measures to boost
wages should not stop, said Lee. Yin adds that cutting
social services has had disastrous effects on growth as
seen in European countries, Africa and Latin America. –
January 20, 2015.
Source:::
The Malaysian Insider , dated 20/01/2015......... |