GST still the better tax system

GST still the better tax system, insists former M'sian PM Najib  

Former Malaysian prime minister Najib Razak says the Goods and Services Tax (GST) is more transparent, effective and better in terms of social justice.

Published 20 JULY, 2018

UPDATED 20 JULY, 2018

KUALA LUMPUR — Former Malaysian prime minister Najib Razak, who introduced the Goods and Services Tax (GST) during his tenure, believes that broad-based consumption tax is better than the Sales and Services Tax (SST).

He said it was clear the GST was more transparent, effective and better in terms of social justice. The effectiveness of returns was better than SST, he added.

Najib was responding to Finance Minister Lim Guan Eng’s admission on Thursday (July 19) that the GST, which the Pakatan Harapan (PH) government had opposed, was more transparent than SST.

However, Mr Lim said the two systems had different impact on the public, with GST putting a greater burden on them.

At the momentous May 9 national polls, PH defeated the Barisan National (BN) coalition that had ruled the nation for six decades since independence from Britain.

Statesman Tun Mahathir Mohamad was sworn in as the country's seventh prime minister the next day.

In his first week in charge, Dr Mahathir announced that the broad-based GST would be zero-rated from June 1, as his government worked to replace it with a reinstated SST.

Mr Lim said earlier this week that the government was to reintroduce the sales tax at 10 per cent and service tax at 6 per cent from September 1.

The SST was expected to bring in revenue of RM4 billion (S$1.35 billion). This pales in comparison to the average collection of RM42 billion annually from the GST since the tax came into effect in 2015.

Responding to Mr Lim's admission on Thursday, Najib said: 

“Good that he is acknowledging it, but fact of the matter is, GST is a much more superior system employed by more than 170 countries.

“The tax system will benefit the people in the long run. It (SST) will never give you the same returns as GST. In fact, SST will only give you half of the returns that the GST can.

“There are also much more implications and I will touch on it soon,” he told the New Straits Times in Parliament.

Rembau MP Khairy Jamaluddin said Mr Lim’s contention that the SST was less of a burden to consumers was because it only taxed 38 per cent of goods and services compared with the GST, which affected more than 60 per cent.

He said with Mr Lim’s admission, the government should retain the GST at a lower rate and increase the list of items on the exclusion rate.

“My suggestion here is to retain GST, but put more items in the exclusion list and reduce the rate. If you do that, you will retain a better taxation system.

“You don’t have to change the system. It is working well and you admitted that it was the better.” NEW STRAITS TIMES