GST inflation and Economic Impact

GST inflation and Economic Impact

After reading last month accountants today magazine, there was something good to share with all my reader.

The following was extracted from one of the articles shared in the magazine (no offence, for sharing only)

What has happened since the introduction of GST since 1 April 2015 and what has its impact been so far? The good news is the economy didn't crash."Second quarter of GDP numbers show that the economy slowed from 5.6% to 4.9%." said Suhaimi Illias, Chef Economist, Maybank. "This could be due to the factors other than GST. The impact has been felt by SMEs, but not so much by big companies. Refunds are taking time, but Malaysia's experience is no different from that of other countries which instituted GST. Inflation has breached 3% but it's not all GST-related."

Koh Soo How, Tax partner and Accredited GST Tax Advisor, PWC Singapore remarked that when Singapore implemented GST in 1994, there was a spike in the first quarter after its introduction, but this levelled off. " The same thing happened in UK in the early 1970s,," he said. "Other factors affected the consumer spending."

Bruce Hamilton, Tax Director, Deloitte Malaysia concurred, adding that the same thing happened in Australia but the situation went back to normal very quickly. "It was not an issue six months later," he confirmed.

Tan Sim Kiat, Deputy Director of Customs, noted that at a rate of 6%, GST had increased GDP by 0.3% so far. "Imports and exports have increased," he said. "The only sectors which have seen a decrease in growth have been agriculture and forestry. Everything else has shown positive growth."

Hamilton remarked that it was difficult to advise businesses at this point because imbalances in situations like these have a tendency to correct themselves. "Other countries experienced similar situations," he said. "Systems need to be 'tweaked' but things will eventually go back to normal."

So what do you think after reading all these? Do you still think of the inflation happened in Malaysia is the fraud of GST?