A group of 70 people representing 29 non-governmental organisations (NGOs) and political parties today submitted a protest memorandum against the proposed Goods and Services Tax (GST) the government plans to introduce in January 2007.

On Sept 10, Prime Minister Abdullah Ahmad Badawi, who is also finance minister, announced the introduction of GST when tabling the 2005 budget in Parliament. This will include tax cuts for corporations and individuals.

His speech drew criticism from opposition leaders, consumers' and citizens' groups that are concerned about adverse implications for low-income earners.

The document entitled Jangan Implementasi GST: GST Membebankan Rakyat Jelata (Don't Implement GST: GST Burdens Citizens) was received by Finance Ministry deputy secretary-general (operations) Abdul Rahim Abdul in Putrajaya.

The group also carried placards and banners which read Hentikan GST (Stop the GST), Gubal Akta Gaji Minima (Formulate Minimum Wage Act), GST Untung Korporat, Rugi Rakyat (GST Benefits Corporations, Citizens Lose).

Signatories to the memorandum include trade unions, political parties, civil society bodies and grassroots NGOs including the Malaysian Trades Union Congress, Suaram, PAS, Aliran, Centre for Orang Asli Concerns, Group of Concerned Citizens and DAP.

Retain corporate taxes

They want the government to retain corporate taxes, control the price of essential items, raise workers' wages in tandem with inflation and reject any neo-liberal policy to control Malaysia's economy.

About 11.15am, five group representatives were taken to meet Abdul Rahim to hand over the protest memorandum and to explain the peoples' objections to the proposal.

Met later in his office, Abdul Rahim said he would hand the document to Second Finance Minister Nor Mohamed Yakcop before the ministry's post-cabinet briefing.

"The people are not very happy with the GST and their memorandum contains their complaints against it. I've listened to them and will pass the document to the minister this afternoon," he said.

"The public is unhappy because they don't know which items will be taxed."

Today is Abdul Rahim's fourth day in office. He was the former Pahang state secretary.

Rich-poor divide

Met outside the ministry, co-ordinator D Letchimi said the people want the government to stop implementation of the GST.

"It will burden the people and contribute to the widening gap between the rich and the poor, not to mention raise the inflation rate," she said.

"Although the government has not explained the GST and its effects on the average household income, our impression is that all goods and services will be taxed, and this in turn would be passed on to the consumers."

She said the tax burden currently borne by the corporate sector would be shifted to ordinary people under the GST scheme.

"The government has refused to consider a minimum wage for the low-income earners. How can it deny a minimum wage and introduce GST at the same time?"

Citing research findings by Universiti Malaya, Letchimi said the 11.4 percent poor-rich divide in Malaysia is currently the highest in the Asia-Pacific region.

"Even developed countries are experiencing problems with GST, what more Malaysia which is still developing," she added.

New Zealand, she said, had introduced a 10 percent GST in 1980 which rose to 12.5 percent in the late 1980s.

"The government realised that citizens could no longer afford to buy consumer goods, and this happened in a developed country which was once known as a welfare state. Just imagine the impact (of GST) on Malaysia," she said.

Letchimi said an Australian study showed that those with an annual income of A$60,000 would save A$62 a week, while workers earning A$20,000 a year would only save A$4 a week.

"Australia and New Zealand, for example, are facing problems because the GST has allowed the rich to save more whereas the poor have been forced to fork out a bigger chunk of their income."

Hardship for poor

Dr Mohd Nasir Hashim, chairperson of the yet-to-registered Parti Sosialis Malaysia (PSM), said it had suggested that the government nabs tax evaders instead of implementing the GST.

"We asked the government to review the GST policy. We have to push this or risk the implementation of GST and face more problems," he told reporters after the 40-minute meeting.

"We also raised the issue of the worsening poverty level despite the increasing per capita income and how the GST will further burden the poor."

Insisting that the GST was unsuitable for Malaysia, Nasir also expressed doubts that the government would respond.

"We know that our protests may not be taken seriously given the fact that even the MTUC has yet to meet the prime minister despite repeated requests," he said.

"But we're here today as it is our right to provide input to the government, especially since it has asked for public feedback on the GST. Since it has not decided on the items to be taxed, we don't want to jump the gun, that is why we're following the proper channels to air our protest."

While waiting for the representatives to return, Community Development Centre co-ordinator A Sivarajan explained to the crowd outside the ministry that no citizen should be taxed for locally-produced products and services.

"Why should we pay tax for goods that we produce ourselves?" he asked.

PSM pro-tem vice-president Dr Jeyakumar Devaraj cited the 8th Malaysia Plan to argue that the monthly average income of Malaysians was still less than RM3,000.

"Furthermore, the government is still proceeding with privatisation. The implementation of GST will only worsen things and cause terrible hardship to the poor."

As a next step, the signatories plan to launch an awareness campaign to explain the effects of the GST on peoples' daily lives.

"The better people understand how the GST works, the more voices will be heard," he added.