Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on May 21, 2018 - May 27, 2018

THE Council of Eminent Persons, which has been tasked to advise the new Pakatan Harapan (PH) government on policy-making, expects the Sales and Services Tax (SST) to be implemented “very soon”.

At a press briefing last week, council chairman Tun Daim Zainuddin said while certain details have to be ironed out, the government can prepare itself to implement the recycled tax system in two to three months.

However, the rates have not been established, he added. “That, you have to ask the Ministry of Finance. I am not the finance minister.” He expects the new tax to generate around RM30 billion for the government.

The Goods and Services Tax (GST) will be zero-rated from June 1. Abolishing the tax was among the election promises made by PH, which took over Putrajaya from Barisan Nasional in the May 9 general election.

The previous government had replaced the SST with the GST in 2015, partly to make up for the shortfall in oil revenue following a massive drop in crude oil prices.

PH had vowed to reverse the process, arguing that the GST — a “blanket” tax that takes in over RM40 billion annually — had contributed to a higher cost of living for the middle and low-income groups.

On a related matter, Daim said the council will meet national oil corporation Petroliam Nasional Bhd this week to discuss the process of re-introducing the fuel subsidy, as outlined in PH’s manifesto.

Asked what implications policies such as eliminating the GST and reintroducing subsidies would have on the country’s sovereign credit rating, Daim said, “In the US, rating agencies gave high ratings to subprime mortgages. They downgraded us during the 1990s recession ... I am not very concerned about the rating agencies.”

 

 

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