Concerns on proposed heavy penalty for first-time GST offenders

Gerakan concerns on proposed heavy penalty for first-time GST offenders

Cheah Soon Hai: Education is the best deterrent to GST offences instead of introducing tougher penalties

Press statement by

Gerakan Deputy President

Dato’ Dr. Cheah Soon Hai

1 April 2014

Gerakan Deputy President Dato’ Dr Cheah Soon Hai welcomed the tabling of Goods and Services Tax (GST) by Deputy Finance Minister Datuk Ahmad Maslan for first reading in Parliament yesterday. However, he was concerned over the proposed heavy penalty for Goods and Services Tax (GST) offenders under the newly tabled GST Bill 2014 as he held that educating the public on the proposed implementation of GST is more important than introducing tougher penalties at the early stage of its introduction to the public.

Cheah pointed out that GST tax system is present in 160 countries with its viability and fairness being accepted and well proven. However, he raised concern that the public still have a poor understanding over the proposed implementation of 6% GST scheduled to be implemented on April 1 next year. He believed the poor understanding of GST is the main reason that contributed negatively to the low public approval over the proposed tax system.

Hence, Cheah believed the proposed heavy penalty for GST evasion and abetment with a fine of between 10 and 20 times the amount of tax involved and subjected to a maximum jail sentence of five years or face both the fine and imprisonment is simply too harsh to be introduced at this early stage. Moreover, by taking into the consideration the prevailing lack of knowledge among the public towards the proposed implementation of GST, it obliges the authorities to further educate the public through outreach programs and patient engagements instead of imposing coercive and mandatory penalties for punitive means.

“Although I accept that more severe penalty should be meted out to deliberate repeat offenders, nonetheless I suggest that a mild or lightened penalty be introduced to first-time offenders at this early stage of its introduction. Warning letter and symbolic fine should be handed out to first-time offenders before severe penalty is given in view of the poor understanding and negative acceptance towards the proposed GST. After all, I strongly believe that education is the best deterrent to GST offences instead of introducing tougher penalties,” said Cheah.

Cheah stressed that poor understanding among the public and low level of public approval towards the proposed implementation of GST is still the main drawback of the new tax system on which the introduction of punitive laws do not help in winning the people’s approval. Hence, he called upon the government to review the GST Bill 2014 and lighten the penalty for first-time offenders. He added that the authorities must also continue educate the public through GST outreach programs to convince the people on its viability and fairness.