It S Anwar Who Does Not Understand Gst

---

 


Prime Minister Anwar Ibrahim has displayed a remarkable lack of understanding of the goods and services tax (GST).
He blithely said the six percent tax was across the board when over 200 exemptions were made to relieve the impact on the poor.
While arguing against calls for the re-introduction of GST, he said: “Sometimes, MPs need a bit of a crash course. They love saying ‘SST is not good!’ ‘Return the GST!’ But do you even understand GST?
“Ask the secretary-general of the Economy Ministry or Finance Ministry - yes, GST is better and simpler. Six percent - everyone pays. But let me ask - if it’s six percent across the board, why should the poor and unemployed pay?” asked Anwar.
ADSAs the finance minister too, that lack of knowledge is astonishing and highlights yet again that he is not fit to be in that position and should hand it over to someone else who has more knowledge of such matters.
Anwar should be aware that the archaic sales and service tax (SST), which his ministry is extending, now covers more goods and services than the previous GST imposed by former prime minister and finance minister Najib Abdul Razak in April 2015.
In effect, this Madani government has used SST to cover areas wider than the GST, in some cases increasing taxes in select areas to as high as 8-10 percent, covering things like food items and other so-called imported luxuries, for instance.
By introducing taxes on things that people like, the government makes them a luxury item. A stand-out example is cars, which cost 50-300 percent more here than in many other places around the world.
SST collection
Anwar’s assertion that food imports should be taxed is extremely naive, considering that some RM80 billion worth of food is imported a year because we need to.
We even import rice because local production is insufficient. Tax all of this, and you can expect another round of inflationary pressure on the people.
If all of it were taxed at even five percent, that would mean a cool RM5 billion extra in government coffers, money which would come from all consumers. This also implies that if SST is widened, the tax raised could be as much as doubled.
Everyone, not just rich people, consumes some foreign food because our country does not produce enough food to meet our demands. Thus, taxing food items we can’t or don’t produce should not be an option.
In 2024, the Treasury estimated SST collection at around RM45 billion. With the increase in SST to 8-10 percent from six percent and the widening of the base to be as extensive as the previous GST, one can expect that a further RM45 billion in revenue will be gained as a result.
This expansion of the SST to cover much more ground will put increased strain on the public who will pay much more in taxes, without the benefits of a GST which allows for refunds based on taxing only value-added in the supply chain, and the added benefit of reducing tax evasion because records have to be kept assiduously.
On top of that, there is a system of exemption on the previous GST, which exempted over 200 goods to ensure the poor did not suffer from these measures. These include essential food items, clothing, education, health and many others, which the current expanded SST does not seem to exempt.
ADSGST introduction and abolishment
Anwar was in detention at the time GST was introduced on April 1, 2015, over 10 years ago. But that’s no excuse for not knowing its history, mechanism and benefits. By the time the election was held in May 2018, GST had already been in place for three years and for two full financial years.
Thus, they could not be blamed for any price increases in 2018, but Pakatan Harapan, and particularly the DAP under Lim Guan Eng, made the abolition of GST a campaign issue.
The first major thing after he became finance minister following the 2018 election was dismantling the GST, refusing to set a zero rate for the GST to leave the mechanism intact.
It would seem that reintroducing the GST would be the best thing to do, given that it covers the entire range of goods and is combined with a higher tax rate. It just needs a mere act of Parliament in a majority decision.
The added benefit is that it may negate the need for e-invoicing with the GST system requiring the keeping of good accounts to claim tax refunds - the Madani government will kill two birds with one stone.
But can we expect this Madani government, whose prime minister-cum-finance minister is so ignorant of the GST and its implications, to make this momentous, courageous and least costly decision to re-introduce GST at six percent? - Mkini
P GUNASEGARAM says the sooner we introduce the long-overdue GST and thereby a broad-based consumption tax, the sooner we will solve our budgetary problems. Some 175 countries have.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

---