‘Illogical’ to accuse SST as bigger burden
Lim says the policy is in line with Pakatan Harapan’s manifesto to raise the level of social security among housewives who rely fully on their husbands (Pic: Bernama)

by NG MIN SHEN

Finance Minister Lim Guan Eng (picture) challenges former Prime Minister Datuk Seri Mohd Najib Razak and the Opposition to explain how the Sales and Services Tax (SST) is a bigger burden on the people than the Goods and Services Tax (GST).

Lim said the SST collects RM21 billion per year compared to the RM44 billion expected to be collected from the GST in 2018, according to the previous administration’s projection.

“False claims by Umno that SST will burden the people even more than GST is illogical when the SST collects RM23 billion less than the GST,” Lim said in a statement yesterday.

Lim was responding to Najib’s remarks to reporters when met at Parliament yesterday, that the implementation of the SST would be a “double whammy” as it would increase the people’s burden.

Najib claimed the zero-rating of the GST has not resulted in cheaper goods, while some prices have even increased.

“According to them, my announcement that reverting to the old system of sales tax at 10% and services tax at 6% means that the tax rate would be at 16%; higher than the 6% GST. This is untrue, because we cannot simply add up the sales tax and services tax, which would be equating apples with oranges,” Lim said.

On Monday, Lim announced that the SST would be re-introduced beginning Sept 1, once the related bill is tabled and passed during the current Dewan Rakyat sitting.

The SST will replace the GST, which was zero-rated in June from 6% previously. Under the SST, goods sales will incur 10% tax while the provision of services will be at 6%.

Lim further said the sales tax at rates of 5% and 10% applies to selected manufactured and imported products rather than all products, while the 6% service tax applies to selected services and not all services — unlike the GST.

“The sales tax is imposed on manufacturers’ and importers’ price, while the GST is imposed on the final consumer price. Hence, it is wrong to claim that a 10% sales tax is higher than a 6% GST,” Lim said.

He explained that a manufacturer would impose a 10% sales tax of 10 sen on a soft drink manufactured for RM1. However, when the same can is sold to a consumer for RM2, a 6% GST of 12sen would be imposed on the item.

“Compared to the GST, the new government has ‘returned’ RM23 billion to the people. Umno should try not to deceive the people that they will be worse off with the SST when the same SST system adopted by Umno before April 1, 2015, did not cause hardship to the people like the GST had done.”

In order to simplify the SST, the Ministry of Finance has undertaken a comprehensive SST review exercise with the assistance of tax consultants from accounting firm PricewaterhouseCoopers (PwC).

“PwC will help rationalise tax collection and reporting requirements to ensure that the SST will be even more efficient and less bureaucratic than the GST or even the old SST system. PwC will ensure the SST imposed on Sept 1, 2018, will be simpler, less cumbersome and prevent leakages and loopholes,” Lim added.

The new SST will also be tweaked and designed to ensure that the impact on lower-income group is proportionately less, unlike the GST which affects the poor proportionately more.

According to Lim, details of the improvements will be announced when the new SST bill is tabled in Parliament during the current sitting.