Only 38% of goods in CPI basket taxed under SST


The Sales and Services Tax (SST) will be imposed on 38% of the products included in the inflation measurement basket compared to 60% charged under the unpopular Goods and Services Tax (GST), said Lim Guan Eng (picture).

The finance minister said despite GST being recognised as a more transparent and efficient taxation mechanism, it puts a greater burden on the public.

“We cannot deny in terms of transparency and efficiency, GST is better than SST. The GST allows the government to collect more tax. But it has an impact on the people,” he told reporters at the Parliament lobby yesterday.

The country inflation is measured by the Consumer Price Index (CPI), a basket of products identified under various categories. The price movements of the items dictate the rise or fall of the inflation.

Among the main groups in the CPI are food and non-alcoholic beverages, alcoholic beverages and tobacco, housing, water, electricity, gas and other fuels, recreation services and culture, transport, and restaurants and hotels.

Under SST, items like sardines, dairy products, coffee, tea, chilli sauce, tomato sauce, cereals, buttermilk, motorcycle below 250cc and bicycles are exempted. These items are taxed under the GST regime.

The Opposition has taken the Pakatan Harapan’s government to task over the reintroduction of SST — set in September after abolishing the GST.

The previous government has maintained that the GST is a better solution to the country and the people will suffer without the consumption tax.

Barisan Nasional leaders have been growling on the SST issue, claiming the new government has gone against its promises to lessen the burden of the people.

Lim issued a statement yesterday to challenge the Opposition to prove “how could the SST burden the people more than the GST when the expected collection from the SST is estimated at RM21 billion for a full year, while the GST was expected to collect RM44 billion in 2018?”

“The rakyat have not yet received any response as to how the GST is better for the rakyat than the SST, when the GST collects RM23 billion more in taxes,” he said in the statement.

The former Penang chief minister also said the SST is a single-stage tax, imposed on manufacturers and not on end customers.

“GST is a multi-stage tax where tax is payable by all parties in the supply chain.

“For instance, if a teddy bear needs to pass through five suppliers before being sold, then the GST would be imposed on each stage before the customer gets served. While the SST is only imposed once on manufacturers,” he said.

“The Pakatan Harapan government does not deny that the SST will still impose some financial impact on the rakyat, but there is no doubt that the impact will be less than the GST by almost half (RM44 billion collected by GST versus RM21 billion by SST),” he said in the statement.

Meanwhile, when explaining the government’s move, Lim claimed that the previous government was very slow in processing the GST refund payments to companies, subsequently pushing prices higher.

He said the government will reveal the amount of money that was not returned to manufacturers under the GST.

“It is not a small matter, it’s a big scandal which forced us to decide that we have to do away with GST,” he said. The SST will be enforced on Sept 1.

Its reintroduction, rising crude oil prices and extra dividends from government-linked companies are expected to bring in an additional RM14.4 billion in revenue this year.

The GST was introduced in April 2015 as the previous government wanted to diversify its revenue and be less dependent on petroleumrelated income.

The Pakatan Harapan government’s promise to repeal the GST was one of factors that led to the historic victory.