He said that it is time the GST is introduced but it should be at a lower rate of 3-4% at the outset, to be adjusted later on, depending on the situation.
"It is time to implement the GST but to impose 7% straight away is too much," he told Sin Chew Daily.
Minister in the Prime Minister's Department Datuk Seri Idris Jala said on Friday that Malaysia would be able to rake in an additional income of up to RM27 billion if the proposed GST is implemented at 7%, similar to the rate in neighbouring Singapore.
GST is the economic trend, Lim said, adding that Malaysia and Myanmar are the only two countries in Southeast Asia that have yet to implement the taxation mechanism.
"However, the government cannot just take and not give," he added.
Lim said the government should ensure that sales tax is removed, and personal and corporate taxes are lowered with the implementation of GST.
"To strike a balance in taxation, the government can implement these measures gradually, such as starting the GST at 4% and reducing corporate tax from 25% to 22% and eventually 20%," he said.
Great Vision Wealth Management Sdn Bhd tax and financial planning head Datuk Chua Tia Guan also said the proposed GST should be introduced gradually.
"For Malaysia, 7% for GST is on the high side at the implementation stage, and will cause inflation. Only through sound financial management can inflation rate be kept within a comfortable range," he said.
Citing Singapore as an example, Chua said the republic's inflation rate went up by 3% when it implemented a 3% GST, and it took the country three years to bring inflation down to pre-GST rate.
He said implementing the GST will broaden the tax base, and help overcome the problem of tax evasion but the issue is the percentage at which it is to be fixed.
Federation of Consumers Associations of Malaysia (Fomca) president Datuk N. Marimuthu said if the government is bent on implementing the GST, it must first educate the public on its benefits as well as its impact on the prices of goods and services.
Source Thesun
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