How Would A 6% GST Be Positive for the Malaysian Economy?

Now that the Government has finally announced the launch of the Goods & Services Tax (GST) by 1st April 2015, there will be a growing debate on whether it is positive or negative for the Malaysian economy.

The good news for Malaysia is that on 25th October 2013, the Malaysian government is finally admitting that economic realities do matter and political priorities will have to adapt to the current global economic realities. This admission comes after decades of sheltering the Malaysian consumer with subsidies and constraining labour productivity with misguided policies.

Likewise, the Malaysian public will begin to get a clearer understanding of the macroeconomic issues involving their livelihood, their cost of living and why their wages are not growing as fast as their regional counterparts.

I shall enumerate the core issues involved and the economics of taxation to answer this controversial and politicized issue (all things related to taxation are political).