If SST needs GST to fix it, just bring back GST, says DAP man

 Kepong MP Lim Lip Eng says there is no need to build a complicated hybrid just to avoid the GST name.

The GST, a multi-stage consumption tax, was introduced in April 2015 at 6% before being zero-rated in June 2018. (Bernama pic)

PETALING JAYA:

Instead of trying to integrate the sales and service tax (SST) with the goods and services tax (GST), the government may be better off just bringing back the GST, says a DAP MP.

Kepong MP Lim Lip Eng said Putrajaya should seriously consider bringing back GST, a multi-stage consumption tax that was initially introduced in April 2015 at 6% before being zero-rated in June 2018.

“If the answer to SST’s weaknesses is to combine GST into SST, then the government should also be prepared to consider a properly designed GST, with stronger safeguards, faster refunds and targeted assistance for lower-income Malaysians,” he said in a statement today.

“Tax policy should be about what works, not what we call it. Do not build a complicated hybrid just to avoid the GST name. If GST works better, bring it back properly.”

Lim also argued that with most countries using GST, the consumption tax may be the best answer for Malaysia.

“At least 176 countries now use GST. There is no equivalent international count for the Malaysia-style SST. More importantly, there is no country using the exact SST-GST hybrid now being considered by the government,” he said.

According to Lim, who is the Kuala Lumpur DAP secretary, Malaysia expects to collect RM59.6 billion from SST in 2026.

“So, before creating a new hybrid, the government must show Malaysians the numbers,” he said.

“How much of the RM59.6 billion will be claimed back by businesses? How much will have to be refunded? How quickly will refunds be paid? How much revenue will the government actually keep? Which sectors will still face tax-on-tax?”

He said such details are important as they would determine whether the new system will actually be simpler, fairer and more effective than what we have today.

Last month, Prime Minister Anwar Ibrahim said the government was open to studying how components of the GST could be integrated into the present SST system.

Anwar, who is also the finance minister, said the SST should remain the base tax scheme although GST-based adjustments could be made to establish a more progressive tax system. - FMT