Only a country that looks back switches from GST to SST — Ahmad Zahid

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KUALA LUMPUR (July 19): Opposition leader Datuk Seri Ahmad Zahid Hamidi condemned Putrajaya's move to switch Malaysia's consumption tax system to sales and services tax (SST), from goods and services tax (GST).

In a press conference at the Parliament lobby today, Ahmad Zahid said only a country that looks back would make such a move.

"Although GST has been zero-rated, goods prices are not dropping. GST is implemented in more than 160 countries, only a country which look backwards move back to SST," he said.

"But we will give them a chance to try, because their promise is to reduce cost of living, let's wait and see, we [have] given them 100 days to implement, let's see what would be the outcome one year after Sept 1 this year," he added.

Earlier today, Finance Minister Lim Guan Eng said the upcoming SST, which will come into effect on Sept 1 this year, will only be imposed on 38% of the Consumer Price Index (CPI) Basket of goods, compared with 60% under the GST.

Therefore, he said the facts and figures do not support claims by former Prime Minister Datuk Seri Najib Razak that Malaysians will be taxed more under the SST tax system.

So far, Lim said Najib has not responded on how the SST would burden the people more than the GST when the expected collection from the former is estimated at RM21 billion for a full year, while the GST had expected to collect RM44 billion in 2018.

Lim said SST is a single-stage tax imposed on manufacturers and not on consumers while GST is a multi-stage tax where all parties in the supply chain are taxed.

"Technically, each supplier can claim back GST as an input tax from the government. Nonetheless, this still causes a huge problem with operating cashflow for many businesses as the government has been notoriously slow in refunding GST claims," he said.

"The delay in refund has caused many businesses to factor in the delay and escalate their prices. Although GST is more transparent, but it sided the government," he added.

Lim said he will expose at a later date the real cause of the failure of the previous government to repay refunds to claimants promptly.

"At the same time, Pakatan Harapan hopes the extra RM23 billion returned to the people will stimulate private consumer demand, raise business optimism which will in turn generate economic growth," he said.

Lim said there is 'no doubt' that the impact from the SST will be less than GST by almost half.

In the Dewan Rakyat in the morning, Lim conceded that the SST system is not as transparent as the GST, but stressed that the former will reduce Malaysian consumption tax by half.

In his parliamentary response to Ayer Hitam member of Parliament Datuk Seri Wee Ka Siong, Lim said the government is not going to deny the fact that SST is going to have an impact on prices, but the impact will be relatively less significant than GST.

"We understand that GST is more transparent and efficient, but it is because the tax collection spans a wide range, that is why SST is estimated to collect about half of what GST would collect annually, so there will be impact, but what we're concerned [with] is the impact towards the end user, and SST would have less impact to them," he said.