SST fits into Malaysian model, says Dr Mahathir

PM says Malaysians will be paying SST only when they choose to purchase taxed products


THE Sales and Services Tax (SST) will be more fitting for Malaysians compared to the broad-based Goods and Services Tax (GST), said Prime Minister (PM) Tun Dr Mahathir Mohamad.

Reacting to criticism on the government following Finance Minister Lim Guan Eng’s announcement on Monday on the reintroduction of SST at 10% and 6% for sales and services, Dr Mahathir said Malaysians will be paying SST only when they choose to purchase taxed products.

“The 10% for sales tax is only applicable if you purchase. If you don’t purchase, you don’t pay; whereas GST is a tax at source, so whether you buy or not, everything will go up in price,” he told reporters after the official opening of the 14th Parliament meeting yesterday.

On the transparency of the tax, Dr Mahathir said constant “nasty questions” from themedia will keep the government in check at all time. “We have to press you know, we can’t be opaque about it (SST) because the press keeps on asking nasty questions,” he said.

Lim had revealed on Monday that the SST rate will be set at 10% for sales and 6% for services, with the bill on the tax expected to be passed in Parliament next month.

SST is expected to bring in revenue of RM4 billion, and result in RM21 billion of loss in government revenue after zero-rating the GST since June 1.

SST will be enforced on Sept 1. Its reintroduction, along with the rising crude oil prices and extra dividends from government-linked companies, is expected to bring in an additional RM14.4 billion in revenue this year.

Malaysians had been paying GST since April 2015 at an initial rate of 6%, a move by the previous government to diversify its petroleum-dependent revenue base. GST was then introduced in place of SST. GST was invented by a French tax official in the 1950s.

In many countries, it is also known as value-added tax (VAT). Roughly 90% of the world’s population live in countries with VAT or GST.

Today, more than 160 nations — including the European Union and Asian countries such as Sri Lanka, Singapore and China — practise GST.

The Pakatan Harapan government promised to repeal GST if it wins the federal government in the last 14th General Election, which was believed as a key factor for the coalition’s landslide victory.

The government is expected to table the motions to repeal the GST Act 2014, and re-enact the Sales and Services Act in the current sittings.