KUALA LUMPUR: A consumer group and an economist have voiced their take on the Sales and Services Tax (SST) versus the Goods and Services Tax (GST) dilemma.
Federation of Malaysian Consumers Associations (Fomca) chief executive officer Datuk Dr Paul Selvaraj said while the introduction of SST last year did not help much with reducing the prices of goods, re-introducing GST would, in fact, increase the prices.
“Fomca doesn’t feel that SST has reduced the prices of goods but restoring GST will definitely increase the prices,” he told the New Straits Times.
Although he agreed with Putrajaya sticking to SST for now, Selvaraj said the government should shift its focus on other matters that would benefit the people.
“After the introduction of SST, prices of goods did not go down and this shows that there are many other factors impacting the prices.
“One of them is of course on us being dependent on imported goods especially food which means our currency exchange rate becomes an important factor here.
“So, what’s important is for the government to provide good services to the people in terms of healthcare, education, public transport and such,” he said.
Economist Prof Dr Mohd Nazari Ismail while echoing similar view also said that without GST, the government’s tax revenue would be lower which would then affect its finances in the long-term.
He said, although not introducing GST was the most popular decision, however, this would mean that the government would have to borrow more money to pay for expenditures.
Thus, instead of arguing whether the government should stick to SST or re-introduce GST, Nazari said Putrajaya should focus on two matters.
“Firstly the government should focus on reducing expenditures further so that they don’t need to collect more tax from the people.
“Secondly, the people should be educated on the government’s fiscal situation so that they will realise that any increase in government expenditures and subsidies will have to be paid for by them through increased taxation,” he said.
When tabling the 2020 Budget today, Finance Minister Lim Guan Eng confirmed that the government would not re-introduce GST as per the government’s election promise to the people.
According to Lim, the government’s decision to abolish GST in June 2018 and replacing it with SST in Sept 2018 saw the country’s inflation rate reduced to its lowest levels since 2007.
“The government has also been very successful in taming inflation, with 0.2 per cent recorded in the first half of 2019 compared to 1.0 per cent and 3.7 per cent for the whole of 2018 and 2017 respectively.
“Clearly the GST implemented under the previous regime had contributed significantly to higher prices.
“For the full year of 2019, the inflation rate is expected to be at 0.9 per cent," he told the Dewan Rakyat.