Councils absorbing GST not a populist move, says Penang CM

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(May 13): The Penang government's decision to have its two local councils absorb the goods and services tax on the people's use of government and council services is not a populist move, said chief minister Lim Guan Eng.

He said the decision was made to lessen the people's burden, not to be popular, slamming Penang Barisan Nasional chairman Teng Chang Yeow for making the remark yesterday.

"Why when we absorb the tax and shield the people from it, we are accused of being populists? Does it make them (BN) the hero for implementing GST then?" he said in a press conference at the Penang legislative assembly building today, responding to Teng's remark.

Lim also disagreed with a remark by BN's Teluk Bahang rep Datuk Shah Headan Ayoob Hussain Shah that some government services are GST imposed because they were also a form of business.

Shah Headan told reporters at an earlier press conference this morning that the state government was also running businesses by renting out its premises and facilities like halls and parking.

"There is no GST on assessment and quit rent but the state government also has businesses like parking and hall rentals," he said.

Lim said renting government-owned halls could not be regarded as businesses because the rates charged were low.

"We are not making profit from hall rentals. The rental collected cannot even cover the expenses to build the facilities.

"It is not a business, but a public service. It is the same when we build public markets and roads. There is also GST on such projects even when they are not for making profit," he said.

Lim also said RM730 million from the state's total administration expenses of RM887.2 million in this year's budget, excluding the RM158.07 million for salaries and allowances, was also taxable under GST.

The Pakatan Rakyat state government announced on Monday that the Penang Island City Council (MBPP) and Seberang Prai Municipal Council (MPSP) would be absorbing the GST ratepayers were supposed to pay for using council services such as parking and rental for council-owned hawker stalls, halls, land, buildings and other facilities.

Lim said the councils would start absorbing the 6% consumption tax – RM1.2 million by MBPP and RM863,000 by MPSP – beginning July 1.

The Penang government would be bearing the annual sum of RM21.5 million to pay GST, inclusive of the tax the councils are absorbing from ratepayers.

Lim said since Johor and Terengganu were also absorbing the GST for the benefit of their ratepayers, Penang would keep writing to the prime minister to seek GST exemptions for government projects and services.

He last wrote to Datuk Seri Najib Razak on March 4 on the matter but has yet to receive a reply. – The Malaysian Insider