September implementation date for SST on the card

By ALIFAH ZAINUDDIN / Pic By BERNAMA

The implementation of the Sales and Services Tax (SST) is not expected to face major hiccups despite the potential resistance from the Barisan Nasional (BN)-led Dewan Negara and the dire consequence to the country’s finances.

Finance Minister Lim Guan Eng had warned that any “sabotage” to the SST Bill would result in a shortage to the government’s revenue.

The government is expected to collect about RM4 billion this year, if the tax is implemented in September to replace the unpopular Goods and Services Tax (GST). Total annual SST collection is expected to be less than half of the RM44 billion collected from the consumption tax last year.

The drop in collection will put a strain on the government’s finances and push Putrajaya to cut its development expenditure.

Minister in the Prime Minister’s Department for Legal Affairs Datuk Liew Vui Keong (picture) said he is “confident” that there will be no problems in getting the Senate to approve the proposed legislation on time as the upper house had limited powers.

“I do not think that the SST Bill, which is a monetary bill, can be defeated or deferred by the Senate. Despite the fact that the Pakatan Harapan government doesn’t have a majority in the Senate, I am confident that it will sail through without a hitch,” Liew told The Malaysian Reserve.

The Dewan Rakyat passed the Sales Tax Bill 2018 on Tuesday, which was later followed by approvals for the Service Tax Bill 2018 and the GST (Repeal) Bill 2018 yesterday.

All three bills form the SST scheme that will be implemented from Sept 1 this year — a major election promise made by the new Pakatan Harapan government.

To take effect, however, the legislation must be approved by law-makers in both the Dewan Rakyat and the Senate.

The Dewan Negara, the upper house of Malaysia’s Parliament, may initiate legislation, except for financial and fiscal matters, a practice that mirrors the Westminster system.

The upper house may amend legislation as long as it does not deal with financial matters.

Currently, there are 51 senators at Dewan Negara. They comprise six representatives from Pakatan Harapan, 29 from BN, three from PAS, two from Gerakan and 11 others are from various parties and non-governmental organisations.

International Islamic University Malaysia academician Dr Shamrahayu Abdul Aziz said although the Senate has the function to approve bills, senators had no “veto” power to cancel a bill.

But the law professor said they could only delay their approval for a period of not more than a year for non financial-related bills.

“If it is a financial-related bill, the deferment lasts for only a month and it can be discussed again in the Dewan Rakyat. After that, MPs can approve the bill without the consent or any need for amendment by the Senate,” she said.

Asian Strategy and Leadership Institute director Tan Sri Ramon Navaratnam said there may be a counter-reaction from the Senate on the proposed bills, which is expected of a “maturing democracy”.

He hoped Senate members will use good judgement and not oppose them unnecessarily for political reasons.

“In any case, they cannot delay laws for too long because there is a time limit. Hopefully, the Senate will use good judgement and not oppose it unnecessarily for political reasons, but will judge the case based on merits and not stop it from being adopted,” Ramon said.