Shadow economy to drop by 20% of GDP with GST: Ahmad Maslan

JOHOR BARU: Deputy Finance Minister Datuk Ahmad Maslan said the implementation of the Goods and Services Tax (GST) in April will see the percentage of shadow economy, or the underground economy, reduced from 30% of the country's gross domestic product to just 10%.

He said the World Bank has estimated Malaysia's shadow economy to be about 30% of the country's GDP.

He said this means some businesses have never paid their taxes in the past and now, with the GST, they will have to do so.

"The 6% GST is not high. It will not burden the low-income group because most of the essential goods or services are tax-exempted," he said after giving a talk on GST for police personnel at Johor police headquarters, here, today.

He said the number of companies having registered for GST stands at 319,435, with revenue collection expected to amount to RM24 billion in the first year of implementation.

He said GST is based on the progressive tax philosophy of "you use more, you pay more".

On the Barisan National's (BN) preparation for the anticipated Permatang Pauh by-election, he said it has slowed down following the submission of a petition for a royal pardon by the family of Datuk Seri Anwar Ibrahim over his sodomy conviction.

Ahmad, who is Umno information chief, said BN has to switch from Plan A to Plan B, i.e. from "being aggressive" to "slow".

"Now, we have to await the outcome of the petition. The family has every right to seek a royal pardon. Now we will wait for the outcome," he said, adding that although BN has slowed down its pace for the by-election, it is still in the "prepared" mode.

Ahmad also pointed out that when one seeks royal pardon it means that the person has admitted to his offence.

Later, while visiting traders and dealers in Lembah Pantai, Kuala Lumpur, Ahmad said the nationwide GST information programme will continue until May or June to enlighten the public on the concept as it had been distorted by detractors.

In his walkabout in the area, he explained to the traders benefits of the GST and current issues facing the nation.