SHAH ALAM, 11 Nov: The former Deputy Governor-General, Dr Rosli Yaakob, described the statement that rich people will be paying more goods and services tax (GST) by the Minister in the Prime Minister’s Office, Datuk Seri Idris Jala, is misleading.
He said that poor people pay higher tax compared to the rich because the calculations are based on percentage of income.
Rosli said, for example, that a poor person with an income of RM1,000 per month would spend RM160, a tax of 16 percent. Whereas, a rich person who spends at the same rate with RM10,000, will only pay 1.6 percent of tax.
“Of the total amount, we do not deny the truth of his statement. However, the statement is very misleading if we take into account the percentage; the portion of income paid by the rich is far smaller from their total income.
“We can see that the portion of a poor person’s income used to pay the GST is higher, compared to their income,” he told Selangor Kini today.
He said that the way to measure the tax burden is through the percentage of tax paid compared to the income receive, thus making the GST heavier for the poor.
Citing a report from the Malaysiakini news portal, Penang Institute is of the opinion that Idris Jala’s argument that the rich will pay more GST does not match the standard measure of international taxation.
A fellow of Penang Institute, Lim Kim Hwa, said that it is the international practice to measure the impact of taxes on income groups is by looking at paid tax as part of the income and not the absolute tax paid, and this method is also used by the US tax administration, the IRS.