KPDNKK minister says it already had a discussion with the MoF regarding the matter
By FARA AISYAH / Pic By MUHD AMIN NAHARUL
The removal of the Goods and Services Tax (GST) will inject about RM21 billion for consumers to spend, boosting retail spending, increasing public consumption and expanding the overall economy, said Domestic Trade and Consumer Affairs (KPDNKK) Minister Saifuddin Nasution Ismail.
“The government was able to generate about RM42 billion in revenue with the implementation of GST. The target for the Sales and Services Tax (SST) is smaller around RM21 billion.
“Therefore, the difference of RM21 billion now belongs to the consumers, giving them higher purchasing power.
“The government’s revenue is not contributed solely by the tax implementation, but also by private consumer demand and spending,” Saifuddin Nasution told reporters at the Malaysia International Retail and Franchise Exhibition (MIRF) in Kuala Lumpur yesterday.He, however, added that the government must take into account how the impact of the tax implementation will have on the people’s wellbeing.
Saifuddin Nasution also reminded the government to refer to the Consumer Price Index (CPI) basket of goods when finalising the rate of SST.
“Deciding on the rate of SST, the government must consider the information based on the CPI basket of goods which is 30% made up of food, 15% contributed by the housing and utilities sector, while 20% from transportation,” he added.
Saifuddin Nasution said KPDNKK already had a discussion with the Ministry of Finance (MoF) regarding the matter.
The country’s inflation is measured by the CPI, while a basket of products is identified under various categories.
The price movements of the items dictate the rise or fall of inflation.
According to the Department of Statistics Malaysia (DoSM), in June 2018, for the first time in 40 months, the CPI recorded a value below 1%. It stood at 0.8% compared to 1.8% in May 2018.
DoSM said the announcement of the zero-rated GST effective June 1, along with the discounted price offered by retailers in conjunction with the festive season and the implementation of price control scheme for 22 selected items for Hari Raya Aidilfitri, had indirectly affected the price of goods and services in the market.
The Malaysian Reserve recently reported MoF Minister Lim Guan Eng saying SST will be imposed on 38% of the products included in the inflation measurement basket, compared to 60% charged under GST.
Lim admits that 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.
“GST allows the government to collect more tax, but it has an impact on the people,” he told reporters at the Parliament lobby last week.