As complains flood in over the Goods and Services Tax (GST), a DAP lawmaker has laid the blame on the ‘confusing, cumbersome and costly’ list of zero-rated and exempted items of the new tax.

Public Accounts Committee member and Petaling Jaya Utara MP Tony Pua said even the most tax-literate of consumers are confused by the lengthy list of exempted and zero-rated items.

“As we have seen, there is major confusion all around the country among manufacturers, sellers and consumers of all types of goods and services.  Even the most literate of the new tax are often uncertain of the exact classification of products which are either standard-rated, tax exempt or zero-rated,” Pua said in a statement.

Pua: Confusing and lengthy zero-rated and exempted list shows Malaysia not ready for GST

“Many businesses until today have yet to be able to implement their GST system simply because of the sheer complications involved in their goods and services which require extensive reengineering of their work processes.  Accounting wise, any shop which offers or produces all three types of standard, zero-rated and tax-exempt products effectively has to put in place three sets of sub-accounts,” Pua added.

He said the costs involved in such extensive reengineering which often necessitates a computerisation exercise and increased specialised staff, have already caused many smaller firms with small profits to choose to close their business.

“Despite clearly knowing the above, the government has proceeded with its self-pronounced longest list of zero-rated and tax exempt goods and services. It did so purely because they know that the income inequality in Malaysia will not be able to tolerate the regressiveness of the GST system which burdens the poor proportionately more than the rich. 

“However, that in turn defeats the purpose of implementing the GST in the first place as a more efficient and effective taxation system.  Instead, the GST becomes a confusing, cumbersome and costly system to implement,” Pua said, adding that this is the reason why Malaysia is not ready for the GST.

“The government should have instead addressed and resolve the low income and inequality issue in the country first before switching to a GST system.  Had Malaysians achieved a higher income status and lower income inequality, we would not then need to implement a GST system which is riddled with such complicated tax exemptions.

“Instead of boasting about our world’s longest list, Dato’ Seri Najib Razak should be embarrassed that we would soon become the world’s most famous textbook case study on how not to implement the GST,” he said.

“The Barisan Nasional government’s incompetence and the unwillingness to listen to dissenting voices opposing the GST implementation leaves Malaysians once again trapped between the hard rock and the deep blue sea,” he added.

The GST, which came into effect Wednesday, has seen the Customs Department swamped with tens of thousands of phone calls as consumers puzzle over the tax and its implementation. The department received more than 800 complaints on the first day of implementation.