The BN strategic communications team has criticised Lim Guan Eng's statement that Pakatan Harapan has decided to reduce the goods and services tax (GST) rate from six percent to zero percent as part of their campaign manifesto.

"He continues to insist that reducing GST to zero percent is the same as abolishing GST.

"This is untrue as the government and businesses will continue to bear the unnecessary administrative expenses of GST-compliance but does not give benefits to any party. It will become a big negative with no positive benefits," said the team in a media statement.

According to the strategic team, Malaysia would make history if this is implemented as the first and only country in the world which has a GST system set at zero percent.

"The world will laugh at us for having a tax system that will burden the government and businesses with administrative duties and expenses but has no tax revenue for the government," it added.

The strategic team also pointed out that Lim, who is Penang chief minister and DAP secretary-general, had said that if Harapan wins Putrajaya, it would not have the power to abolish GST.

"This shows that Harapan is insincere about abolishing GST and is implicitly acknowledging that implementing GST had always been the right decision by the BN government," it added.

Sales tax abolished

The strategic team also accused Harapan of often giving the impression that GST is an additional new tax that burdens the people but do not acknowledge that with the introduction of GST, two taxes had been abolished, another two taxes had been reduced and BR1M substantially increased.

"The sales tax and service tax had been abolished. While the corporate income tax had been reduced to 24 percent from 26 percent in 2008.

"The personal income tax rate was also reduced to 24 percent from 28 percent in 2008. On top of this reduction, the tax bands have been expanded and various deductions have been allowed to the net effect that anyone earning RM4,000 per month and below do not pay any income tax. This also meant that the income tax payable by the middle-income group had also reduced," it added.

BR1M payments, noted the strategic team, were also increased from RM650 in 2014 to RM1,200 for this year.

Along with the effective income tax exemption for those whose income is RM4,000 per month or less, the team said, this means the B40 income group is taxed at a negative rate by the government after the implementation of GST - meaning the B40 group is a net beneficiary of these tax reforms.

"Harapan knows that the government has lost RM40 billion in Petroleum revenues in 2016 due to slump in global oil prices and had foregone another RM20 billion every year from abolishing sales and service taxes.

"The government also has to bear the tens of billions foregone yearly from the reduction of corporate tax, reduction in personal income tax and increase in BR1M payments.

"With all the money foregone as part of the tax reforms and the fall in petroleum revenues, abolishing GST or reducing the GST rate to zero is unrealistic and will hurt Malaysia.

"Harapan knows this - hence their reluctance to completely abolish GST," it added.

The strategic team said while the rest of the world is striving to become more competitive by modernising their taxation systems through reducing corporate and personal income taxes and implementing consumption taxes such as GST, Harapan wants to do the opposite to increase corporate taxes and dismantle GST.

"One wonders why Pakatan wants to move Malaysia backwards instead of forwards by making unrealistic and economically damaging promises?" it asked.