Tax system must be transparent, efficient and predictable

SIBU: The government should prioritise transparency, efficiency and predictability in any tax reforms to prevent businesses and consumers from bearing the cost of repeated changes, said SUPP Youth chief Councillor Kevin Lau Kor Jie.

Lau said the government’s plan to retain the Sales and Service Tax (SST) while incorporating certain advantages of the Goods and Services Tax (GST) could raise concerns over the complexity and effectiveness of the resulting system.

He said SST and GST were based on different taxation mechanisms and philosophies, adding that combining elements of the two systems would require careful study to determine whether it would genuinely improve transparency and efficiency.

“The more complicated the tax system becomes, the greater the compliance burden on businesses. We must also consider whether such changes could eventually contribute to higher prices of goods and services,” he said in a statement yesterday (Oct 8).

Lau, who was also SUPP Bawang Assan Branch chairman, was commenting on Deputy Finance Minister Liew Ching Tong’s remark on Wednesday (Oct 7) in the Dewan Rakyat in response to a question from Larut MP Datuk Seri Hamzah Zainudin on the country’s total tax revenue this year compared with previous years.

Liew had said the government would continue with SST while incorporating the advantages of GST to prevent cascading taxation.

Lau said while the government had indicated that it would address cascading taxes under the existing system, more details should be made public, particularly on how GST elements would be incorporated and what objectives the proposed changes were intended to achieve.

He said any move to introduce GST elements into SST should not be rushed, as the government needed to assess whether such an approach was necessary and whether it would create an entirely new tax mechanism.

“This raises several questions — will this new system ultimately be implemented, will it be better for the people, and will further changes be required in the future?” he said.

Lau noted repeated adjustments to the tax system could create uncertainty for businesses, particularly SMEs, while also affecting consumers and the wider economy.

Instead of developing a tax structure that was not commonly adopted elsewhere, he said the government should study the experiences of countries that had implemented GST and draw lessons from their approaches.

“The objective should be to establish a tax system that is transparent, efficient and able to reduce the burden on businesses and the people, rather than creating a system that may require repeated amendments,” he stressed.

On e-invoicing, Lau said it should not be confused with GST, as the two served fundamentally different purposes.

He explained that e-invoicing was a digital documentation mechanism that records business transactions electronically, whereas GST was a taxation system.

He said e-invoicing could instead serve as a tool to strengthen tax administration and support the implementation of a GST-type system.

“Rather than spending time incorporating GST elements into SST without sufficient clarity, the government should focus on properly implementing the tax system and establishing clear policies that businesses can understand and comply with,” he said.

Lau added that greater clarity and stability in taxation would be particularly important for SMEs, which could otherwise face additional compliance costs and operational pressures.

“A more transparent and efficient tax framework would help businesses plan ahead while reducing pressure on consumers amid rising living costs.

“The government should ultimately provide a tax system that is transparent, efficient and predictable, so that both businesses and the people can benefit,” he said.