FMT - SST will definitely be implemented this year, says finance ministry:
PUTRAJAYA: The sales and services tax (SST) will be rated at 10%, its previous rate, before the goods and services tax (GST) was implemented in 2015.
Finance Minister Lim Guan Eng said efforts were being made to implement SST as quickly as possible.
GST will be zero-rated from June 1.
When asked how the ministry planned to recover revenue lost from the removal of GST, Lim said the ministry was looking at several options.
First, the ministry needed to have a full and accurate view of the nation’s actual financial position, Lim told a press conference at the finance ministry.
Malaysia obtained RM44 billion in revenue from GST last year. Pakatan Harapan scrapped the GST once it took power after the May 9 general election, in keeping with promises made in its election manifesto.
It has maintained that any shortfall in income from SST will be met by plugging leakages in government expenditure and reviewing mega projects.
In 2014, the year before GST was implemented, the country earned RM17 billion from SST.
A rating agency, Moody’s Investors Service, today said the move to remove GST will be “credit negative”, unless the new government takes steps to offset the loss in revenue.
“Assuming a stable share relative to GDP, and taking into account seasonal patterns, we estimate the revenue loss from the voiding of the GST at around 1.9% of GDP this year.
“We also estimate that if the SST, which yielded revenue of around 1.6% of GDP before the GST replaced it, takes effect in July, the revenue loss would narrow to 1.0% of GDP for this year,” said Moody’s.
While these losses can be mitigated by the higher oil price, this was not a permanent substitute for the GST, and was not a reliable offset to lost revenue given the volatility of prices.
I have often written that oil is a curse and we should not depend too much on it to jaga our economy. Don't spend it like money falls down from Heaven a la Moses' manna, but rather consider it as a bonus for our national savings to look after our elderly, veterans, the less fortunate and our children's future in the long term.
But I am glad the SST at 10% will replace the GST at 6%, wakakaka.
Though not as sweeping as the GST the SST will hit those who didn't realise the fairer and more embracing GST. No one escapes GST thus no favouritism nor kowtim-ness. But SST will have loop-holes which Guan Eng will have to watch out for.
I have always advocate the GST as I live under the Oz GST and know its value and efficiency, but it's the Malaysian voters choice, the only one in the world where SST comes back to replace GST. Malaysia Boleh.
However, don't be surprised if the PH government will ratchet up the GST from its current 0-rated (yes, GST still exists) to some figure in the future, maybe in a couple of years time. So the GST lurks around, waiting to pounce on gullible guppies.
As for the much touted reviewing mega projects I hope we don't buy back Proton from Geeling, nor re-build the crooked bridge nor come up with some other pompous fanciful stuff.
It's a pity we didn't practise reviewing mega projects in a former (and current) PM's days on his extravaganza projects.