Delayed GST refunds further hiked prices - Guan Eng promises exposé

PARLIAMENT | Finance Minister Lim Guan Eng said the rise in prices after the introduction of the Goods and Services Tax (GST) had been worse than expected due to the previous government's inability to provide timely GST refunds to businesses.

This, he said, had had a profound impact on prices, as businesses increased the prices of their goods at every stage of the production chain to compensate for GST refunds which had yet to be issued by the government.

He added that if the refunds had been on time, the impact of GST would still have been greater than the Harapan goverment's impending Sales and Services Tax (SST), but that the situation would not be as severe as it currently was. 

"Why was there a delay in refunds? I will reveal this in the future... it is a big issue," he told a press conference in Parliament.

GST was imposed at every stage of the production chain, but with the exception of the end-user, vendors were allowed to claim back the tax from the government.

The government is required to provide the refund within 14 days but businesses have complained that there were instances where the refunds took months, thus affecting their cash flow.

Asked if the money meant for refunds had been misappropriated, Lim stressed that he will make the revelations at a later date.

"When refunds are not paid on time, it compounds in terms of increasing prices - that affects the cost of living.

"The delay in refunds have caused many businesses to factor in these delays in their products and services so prices of good generally escalated.

"I know you are impatient to know (the reason) but let's address this first," he said.

In the press conference, Lim panned former prime minister Najib Abdul Razak for claiming that the SST system would be worse than the GST.

Lim reiterated that under SST, the government will collect RM23 billion less than under GST.

"I'm not going to say that prices will go down (under SST) like the previous government did (under GST), there will be an impact on the people's finances but it will be half of the GST's impact," he said.

The six-percent GST was introduced under the previous BN administration in April 2015. The Harapan administration has promised to abolish the policy, and reduced the GST rate to zero in June this year. - Mkini