This article first appeared in The Edge Financial Daily on August 8, 2018

KUALA LUMPUR: Finance Minister Lim Guan Eng yesterday accused the previous Barisan Nasional (BN) government of stealing the goods and services tax’s (GST’s) input tax that was to be returned to manufacturers two weeks after it was collected.

The trust fund that held the input tax was actually “empty”, he alleged, which was why the former government could not return the sum in time, despite the two-week promise.

Guan Eng made the accusation when repeatedly asked by Rembau member of parliament Khairy Jamaluddin to state when the new Pakatan Harapan government would return the input tax to the manufacturers.

“According to the law, the money was supposed to be refunded to the companies within two weeks of them being collected as advance under the GST regime. But two years later, the former government has yet to refund it.

“The money was paid as advance by businesses. It was to be put in a trust fund but it was deposited into a consolidated fund and recorded as revenue. Since it was acknowledged as revenue, it was instead utilised first by the previous government.

“You ask me when and why it has not been refunded? It is because it is empty. There is nothing to give. Are you aware of this?” he asked Khairy during a heated exchange over the tabling of the Sales Tax Bill 2018.

The input tax is a GST amount paid or payable by a registered person on the purchases or expenses incurred for business activities, and that the businesses are allowed to claim for it to be refunded from the Customs Department.

Khairy initially defended the delay in the input tax refund, saying there were six to seven billion dispute cases which the Customs Department had refused to refund as the latter questioned the validity of the collection process.

“If there is a problem in the refund process, then this government should fix the process. You [claim to be] a competent, accountable and transparent (CAT) government. So fix it,” Khairy told Guan Eng.

In return, Lim asked Khairy if the disputes were what he has been told the refunding issue was due to, and was that why BN called for GST to be revamped.

“[BN] said it wants to ‘rombak GST’ (revamp the GST) but the [previous] government instead ‘merompak’ (robbed) the refund [for] GST. This is a serious robbery where the money, which was in a trust fund, is not there. How are we supposed to pay back if it is not there? Do not play with financial accounts,” Guan Eng said.

He said he will reveal the sum that was allegedly “lost” after the repeal of the GST Act 2014.

“You should have known. As a minister (then), you had a responsibility to look at the accounts. You have failed to do your work as the minister. This is a collective responsibility,” he told Guan Eng.