SST gets go ahead in Dewan Rakyat

This article first appeared in The Edge Financial Daily, on August 9, 2018.
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KUALA LUMPUR: The Dewan Rakyat yesterday passed a proposal to implement the Sales and Services Tax (SST) system from Sept 1 after having earlier approved the Services Tax Bill 2018 and the Goods and Services Tax [GST] (Repeal) Bill 2018.

“Finally, GST is dead,” Finance Minister Lim Guan Eng declared after the third reading of the Bill to repeal the Goods and Services Tax Act 2014 in the Dewan Rakyat.

The repeal Bill came after the lower house had passed the Sales Tax Bill 2018 on Tuesday and Services Tax Bill 2018 earlier yesterday.

After the GST Act had been repealed, the Dewan Rakyat adjourned to reconvene this morning.

Two other Bills to amend the Free Zones Act 1990 and Customs Act 1967, which are consequential to the implementation of the SST and the repeal of the GST, are expected to be tabled next.

The amendments to the Free Zones Act are mainly to remove the duplication of provisions which have already been provided for under the SST Bills.

Notable amendments to the Customs Act include increasing the penalties where a customs agent acts without approval, from the present fine of an amount not exceeding RM500, to imprisonment for a term not exceeding five years or a fine not exceeding RM100,000, or both.

Earlier in a winding-up speech during the Second Reading of the Bill to repeal the GST Act, Guan Eng reiterated the government’s view that GST could not lighten the cost of living.

He assured lawmakers that his ministry would initiate a probe into the monies missing from the government’s Trust Account which holds the input tax refunds collected under the GST system.

“I want to guarantee all MPs (members of parliament) that we will investigate how these monies were lost. I have asked the former Treasury secretary-general for an explanation,” he said, adding that an internal investigation will be carried out to determine individuals responsible along the chain of decisions.

Although the loss occured under the previous administration, Guan Eng said the government was morally obliged to repay the input tax refunds to business owners.

Since GST was implemented on April 1, 2015, Guan Eng said the gross amount collected was RM190 billion, and the amount that was supposed to go into the Trust Account over a cumulative three-year period was RM83 billion.

However, he pointed out as only RM63.6 billion was refunded from the Trust Account, RM18 billion was missing as a mere RM1.5 billion remains in the account.

MPs from both the ruling party and the opposition called for an investigation into the matter.

Interjecting Guan Eng’s speech, Fahmi Fadzil (PH-Lembah Pantai) called for a Royal Commission of Inquiry into the missing amount as the sum involved was “mind-boggling”.

Ramkarpal Singh (PH-Bukit Gelugor) stressed that former finance minister Datuk Seri Najib Razak was obliged to explain the matter to the Dewan Rakyat.

Datuk Seri Dr Wee Ka Siong (BN-Ayer Hitam) and Khairy Jamaluddin (BN-Rembau) concurred, both standing up to say that they support a probe to uncover the truth.