TODAYonline
KUALA LUMPUR – Malaysia’s government put off a politically risky plan to enforce a 4 per cent goods and service tax (GST), cheering opposition critics who claimed it would burden the poor.
Prime Minister Najib Razak’s administration had previously planned to debate legislation in Parliament later this month to impose the tax by 2011 in an effort to boost revenue by about RM1 billion ($421 million) annually.
The plan stirred fierce criticism from social activists and opposition parties, who insisted the tax would cause inflation to rise and unnecessarily trouble poor and middle-class earners.
Second Finance Minister Ahmad Husni Hanadzlah said on Saturday the government will indefinitely delay plans to debate the legislation until it can convince people that the tax would aid the country’s economic well-being.
“It will depend on our engagement with the public and acceptance of the people on its implementation,” Mr Ahmad Husni was quoted as saying by Bernama. “We do not want to put a time frame on that.”
Analysts have said the sales tax might spur public dissatisfaction against Mr Najib’s ruling coalition, the Barisan Nasional, which is expected to call for elections in the state of Sarawak sometime over the next year.
“The question is which of these they want to secure – a balanced budget or an election victory,” Mr Azrul Azwar Ahmad Tajudin, Chief Economist at Bank Islam in Kuala Lumpur, was quoted as saying by Reuters.
He added: “This is a policy flip-flop. Back-pedalling will always send the wrong signals to the market and to foreign investors.” ARTIKEL PENUH (MORE) »