The previous BN administration had overestimated the GST revenue generated which resulted in the shortfall, says Noraini

pic by TMR File

THE Public Accounts Committee (PAC) has confirmed that RM19.4 billion worth of Goods and Services Tax (GST) refunds, which allegedly went missing from the government’s coffers, had actually been diverted to finance operating and development expenditure.

PAC chairman Datuk Noraini Ahmad said the previous Barisan Nasional (BN) administration had overestimated the GST revenue generated which resulted in the shortfall.

“There was no money missing from the GST collection. The revenue was not transferred to the GST refund

account as it should… instead it was used to fund management and development expenses.

“The BN government had overestimated the net GST collections by 65%,” she said in a statement yesterday.

The Umno MP, who was appointed to lead the bipartisan committee in April, said the revenue collected from GST had been kept in a consolidated fund which was later transferred to the GST repayment fund as and when it was required.

This was inconsistent with provisions under Section 54(2) and 54(5) of the GST Act 2014, she acknowledged.

Noraini added that the policy to transfer 35% of annual GST revenue from the consolidated account to the refund account is inadequate. In fact, she believes that the rate should be set at 42%.

Last August, Finance Minister Lim Guan Eng claimed that the BN government had “robbed” tax refunds that were supposed to be returned to businesses.

Lim said as of May 31 last year, the outstanding GST refund amount stood at RM19.39 billion, while only RM1.49 billion was left in the repayment account.

Meanwhile, Attorney General Tommy Thomas pointed out that channelling GST revenue directly into the federal government’s consolidated revenue account was a breach of law.

In a letter to the PAC dated Oct 9 last year, Thomas said such a practice had violated fundamental trust law principles and accounting requirements.

“The government’s practice to place GST revenue into a consolidated account violates Section 7 of the Financial Practices Act 1957 and Section 54 of the GST Act 2014,” he said.

Thomas added that placing the GST refunds into the consolidated revenue fund seemed to be done to guarantee that eligible taxpayers would get refunds.

In a media report, Kota Melaka MP Khoo Poay Tiong said the PAC report proves that the previous administration stole and misappropriated public funds.

“This is a clear admittance that the moneys for GST refunds were stolen because it is in effect taking and with-holding money from taxpayers by force,” he said.

Following the PAC report, Opposition leader Datuk Seri Ismail Sabri Yaakob moved a motion to refer Lim to

the Rights and Privileges Committee for misleading the Dewan Rakyat.

“The PAC report on GST refunds showed that there is no disappearance or robbery as claimed by the minister. As such, the Opposition would like to refer the minister to the Rights and Privileges Committee,” he said.

Rembau MP Khairy Jamaluddin sought that a decision be made in the current sitting before it concludes on Thursday as the focus of the next sitting would be on Budget 2020.

In response, deputy speaker Nga Kor Ming said: “I give my assurance that the decision will be made in line with the law.”

The PAC began its investigation in August last year, calling in 10 witnesses including Lim.

The parliamentary committee has recommended the government to strictly abide by prescribed laws when dealing with matters related to finances.

It also advised all officers entrusted with the administration of federal financial matters to give recommendations to the government on all laws, procedures and accounting details without fear or favour.