Guan Eng accused of conning rakyat?

Malaysiakini - What Guan Eng should do about RM19.4b GST ‘robbery’ by P Gunasegaram:

The first thing that Finance Minister Lim Guan Eng should do is to establish whether there was a robbery or not from payments of the goods and services tax or GST to the government.

As I pointed out in this article, it is not a robbery if funds were merely moved from one government account into another. That’s plain common sense and cannot be disputed.

It only becomes a robbery if it was embezzled from one or both of the accounts. The two relevant accounts are the trust account into which GST refunds are made and the government’s consolidated revenue account into which revenue collected goes. Since Lim has access to this revenue account, he should be able to quickly say if any money from here has been transferred illegally and make the appropriate police reports.

No major investigation is needed to establish whether a robbery has taken place - all you need to do is to check and see if any money is missing, just as you check and see what is missing from your house after someone breaks in.

The second thing is more complicated and more subjective. Was proper procedure adhered too in paying out GST refunds? The GST Act unambiguously allows the refunds to be paid from the trust account. Customs director-general T Subromaniam said from April 2015 (when GST was imposed) until the end of May 2018, the amount of refunds claimed totalled RM82.9 billion but of that amount, only RM63.5 billion was paid out during that same period.

"The Customs Department had requested RM82.9 billion from the (government's) monthly trust fund for the purpose of GST refunds from April 1, 2015, to May 31 2018, but the full amount was not transferred (from the government's consolidated accounts) to the trust fund.

"As such, as of May 31, 2018, the trust fund still needs and is experiencing shortages to pay back RM19.4 billion in GST refund arrears," Subromaniam said, adding that the monthly trust fund meeting was chaired by the secretary-general of the Treasury.

This indicates that the procedure was for money to be transferred from the consolidated revenue account to the trust account as and when necessary. In fact, the then Treasury secretary-general said, “The Treasury allocates to the GST trust account monthly based on the amount required by the Customs Department and the financial position of the government.”

For better or worse, that was the procedure that was established by the government previously and if Lim wants to make improvements to that and implement a new system, by all means, and tell us how it works.

There have been many complaints about the GST refund system and delays in payment. But no one, including Lim and the Customs DG have explained why this is so. They should do so now. Does the government not have enough money to pay GST? If indeed that is the case, is it the right move to have abolished GST now which is going to considerably worsen the situation in future?

It’s time to govern, not blame

Okay, payments were late before, but why is repayment still late three months after a new government has taken over? Why did it take them three months to find out that the GST amount outstanding as at end-May 2018 was RM19.4 billion and there was only some RM140 million plus in the trust account? Isn’t the GST refund paid every two weeks?

More importantly, how are they going to make these repayments when there is a major revenue crunch ahead with the three-month GST and sales and service tax (SST) holiday, accounting for some RM15 billion in tax foregone as I explained in my last article? Also, an estimated RM3 billion will be foregone this year because of fuel subsidies given by the Harapan government, taking that figure up to RM18 billion.

Also remember, that while GST brought in RM44 billion last year, the new sales and service tax or SST is projected to bring in about RM23 billion only. Even that would be lower because of the extraordinary tax spending that would have taken place in the three months to Aug 31, implying lower spending in the last four months.

For the last four months of the year then, revenue collection will face a shortfall when compared to the same period last year of roughly [4/12 x (44-23)] or RM7 billion. Add this to the RM18 billion, and the sum could be about RM25 billion.

Pray tell us, Lim, how the government is going to raise the money. And in the meantime, what is going to happen to the GST refunds? Where is the money to repay that? Does the government have to resort to borrowing?

And has the monthly meeting to determine transfers into the trust fund to make GST refunds been held for May? And what about for June and July? Why give us the figure for end-May only? Does the government know exactly how much is outstanding in terms of GST refunds as of end-July? How often does the government intend to pay the refunds now? Will it be every two weeks as originally envisaged?

These are the things that the government needs to answer. It’s time to govern, not blame. For answers to problems, we need to be aware of proper terminology. Lim should scrupulously call a spade a spade. Robbery does not equate to improper or poor procedures, robbery happens when something is stolen. Debt is not the same as contingent liabilities, or government guarantees.

As an accountant, he should know how to use the right terms but the fact that he is not using them well, in fact he is using them wrongly and continues to do so, indicates that he is playing to the gallery and to con the common man on the street. In other words, to become popular and to show that he is doing so much for the public.

Related: Latest Malaysiakini report - Lodge police report on GST refund 'theft' claim, Najib dares Guan Eng.