KUCHING, June 3: The proposed reintroduction of goods and services tax (GST) to replace the sales and services tax (SST) would have a compounding effect on the cost of living in Malaysia that will make more fall into poverty under the current poor economic situation.
Reminding the Federal government that Barisan Nasional (BN) which introduced this tax had suffered a crushing defeat in the 2018 General Election, Sarawak United Peoples’ Party (SUPP) Stakan chairman Dato Sim Kiang Chiok was of the view that the reimplementation of GST will not be a popular move.
“Our economy is still in the process of recovering after more than two years of Covid-19 restrictions. The timing is not right for now (to bring back GST).
“Moreover, we are facing high inflation due to supply chain challenges, the Russia-Ukraine war, China’s pandemic lockdown, low ringgit to US dollar exchange rate as well as high petrol and gas prices,” he said in a statement today.
He was commenting on the Federal government mulling the reintroduction of GST as it attempts to expand the country’s revenue capacity and shoulder the weight of public subsidies.
GST was implemented in Malaysia between 2015 to 2018 before it was scrapped and replaced with SST when Pakatan Harapan (PH) took over the government.
But if GST is reinstituted, Sim said the government may want to consider it at lower rates or perhaps even consider maintaining SST with higher tax rates and expand it to more categories of goods and services.
“SST has a narrower tax reach with mostly on imported and manufactured goods and services in Malaysia as compared to GST which is comprehensive and has a wider tax reach at almost every level from manufacturing to trading and end users or consumers.
“When GST was implemented in the past, all businesses, manufacturers and service providers acted as tax agents in assisting the government to collect tax. They had to change their accounting systems to collect and pay GST which increased the costs in doing business,” he explained.
GST not only affected small businesses due to high cost incurred in upgrading systems and providing training, Sim added that the prices of goods also went up as businesses had to adjust to the different way of doing business.
“The imposed rate of six per cent was considered high and had affected the cost of living then. That’s when the government started to give BR1M cash handouts to help the lower income people affected by GST,” he said in urging the government to rethink this strategy.— DayakDaily