GST 4% expected to come into effect in middle of 2011

Our government plan to impose a 4% Goods & Services tax (GST) by middle of year 2011 has been a hot topic nowadays.

Consumers may have to pay an additional 4% for the purchased items, however some selected items would be exempted from GST especially “essential” products such as padi, vegetables, basic goods (rice, sugar, flour, cooking oil), fish, meat and chicken.

The main purpose for the GST is to make the current taxation system more comprehensive, efficient and transparent. The sales and service tax (currently 5% to 10%) will be abolished and replace by GST.

The government expected additional RM 1 billion revenue annually after the 1^st year of the introduction.

This will bring an impact to 85% working population who currently do not pay a single cent of tax because they income is below taxable income. Now they have to pay the GST.

This may bring some burden to some businessman, as people might cut off or reduce their spending on goods which induce to pay the GST.