PUTRAJAYA, Nov 11 ― The federal government’s introduction of the Goods and Services Tax (GST) to shield Malaysia from volatile economic forces is commendable, an official from the Organisation for Economic Co-operation and Development (OECD) said today.

“We think that the reform and the introduction of the GST was very important for Malaysia for one simple reason, the commodities are vulnerable to the fluctuation of the oil prices, which means that your revenue falls,” OECD director of country studies for the economics department, Alvaro Pereira told a news conference here.

Without taxes like the GST, it would be difficult for Malaysia to withstand Putrajaya’s revenue shortfall, he said.

“That’s why it is so important and we commend the government for the courage for taking the GST reform.

“It is very important that to continue to work on this and other areas, but it is very important especially to reduce the vulnerabilities form the external changes in oil prices,” he added.

Pereira had earlier attended the presentation of two OECD reports on Malaysia to Chief Secretary to the Government Tan Sri Ali Hamsa at the Finance Ministry here ― the Economic Surveys: Malaysia 2016 and OECD Reviews on Innovation Policy: Malaysia 2016.

In its reports, the OECD advised Putrajaya to gradually reduce exemptions and then raise the GST rate from its current 6 per cent and to increase income tax “over the medium term”.

Asked to comment on the OECD’s recommendation, Ali only said the government will look into it for the longer term, but asserted that the GST rate will remain unchanged for the time being.

the source: www.themalaymailonline.com