Penang CM wants written guarantee of GST exemption on spending

Penang chief minister Lim Guan Eng wants written assurance that the state government will not have to pay GST on its expenditure. – The Malaysian Insider pic by Hasnoor Hussain, May 3, 2015.Penang chief minister Lim Guan Eng today said he required a written assurance from a federal minister that the state government will not have to pay the goods and services tax (GST) on its expenditure.

In standing by his statement that the state government was facing an estimated RM47.9 million in GST fees this year, Lim said he required a minister's written confirmation to support Penang Barisan Nasional chairman Teng Chang Yeow's claim that the payments were not necessary.

"I cannot take Teng's word for it because he is not a minister, elected representative and was also rejected by the people in Penang twice after losing (in elections).

"If it is true what BN and Teng are claiming, I hope they can guarantee by promising to reimburse the GST amount, once it is paid by the state government," he told reporters after visiting a Buddhist temple with other Pakatan Rakyat leaders in Tanah Liat, Permatang Pauh.

Teng was quoted by Bernama yesterday as saying that Penang government will not have to bear the cost of GST as it is not imposed on administration expenditure.

Teng, however, did not deny that GST would be charged on development spending, but said the state government could get a refund from the Royal Malaysian Customs once the projects were completed, Bernama reported.

Teng had also accused Lim of intentionally misleading the people in saying that the state government needed to bear the costs.

Lim responded by saying Teng was not an accountant and should not act smart.

"The state's projected expenditure is not only emoluments and salaries. It also involves purchases of materials and supplies," he said, adding that Penang’s total administrative expenditure for 2015 was projected to touch RM900 million, out of which only RM271 million was spending for development and management.

He said the RM47.9 million in additional GST costs was based on items taxable under the new scheme, which included spending of both the Penang and Seberang Perai city and municipal councils, Penang Development Corporation and Penang Water Supply Corporation.

The breakdown of the figure comprised RM46.25 million in GST and an additional RM1.65 million for implementing the consumption tax.

"This is an unnecessary burden to be borne by the state government and the people of Penang.

"If the consumption tax is not paid, development work and maintenance projects for public infrastructure and amenities will not be able to be carried out.

"Therefore, the state will endeavour to accumulate the sum to ensure the smooth running of the projects," he said.

He pointed out that it was not only Penang, but other state governments, including Sabah and Sarawak, were also subject to the consumption tax and that the Permatang Pauh by-election was crucial to reject GST.

- TMI