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Najib must come clean on his role in the missing GST billions

Lim Guan Eng  |  Published:  |  Modified:

COMMENT | Former prime minister Najib Abdul Razak has claimed in a blog post that the Pakatan Harapan government could have spent the RM18 billion in goods and services tax (GST) refunds that I am now accusing the previous administration of robbing. This is a shocking accusation by Najib bereft of reason and truth.

The Harapan government is now accused of a wrongdoing and of the delay in making the GST refunds which had been committed to by the previous government.

I had exposed in Parliament last week, that the real reason for the inordinate delays by the previous federal government in making GST refunds, some of which was delayed for up to three years, is due to the previous government’s failure to transfer RM18 billion into a GST refund trust account. My parliamentary speech is reproduced here: 

“But the reality is, the refunding of input tax in the implementation of GST sounds better than it actually is. The previous government had failed to refund input taxes within two weeks.

The Customs Department records which have been verified show that the amount of arrears for GST input claims of more than two weeks is RM19.4 billion as of May 31, 2018. Of this RM19.4 billion, RM9.2 billion (47 percent of the total) is from 2018. RM6.8 billion (35 percent) from 2017, RM2.8 billion (15 percent) from 2016, and RM0.6 billion (three percent) from 2015.

The status of GST refund arrears as of May 31, 2018 is RM19,397 million, while the balance in the payback fund is only around RM1,486 million only.”

The RM18 billion shortfall in refunds is not incurred within one month but built up over three years, since April 1, 2015. Furthermore, this RM18 billion shortfall is as at May 31, 2018.

Can Najib prove his claim that the new Harapan government was able to spend RM18 billion in only three weeks when Najib failed to return GST refunds by three years what the law required to be refunded in two weeks?

Prime Minister Dr Mahathir Mohamad was sworn in as the seventh prime minister of Malaysia on May 10 whilst I was only sworn in as finance minister on May 21. How could Mahathir as prime minister spend RM18 billion in three weeks or I, as finance minister, spend RM18 billion in 10 days as implicitly claimed by Najib?

This accusation by Najib defies logic and beggars belief similar to Najib’s claims that 1MDB RM50 billion is not a financial scandal or a loss to the country; or the hundreds of millions of ringgit in cash, jewellery and 274 designer handbags that were seized were gifts to him; or that RM3.5 million in cash which had been stolen from the Prime Minister’s Office by security guards belong, not to him, but to Umno.

Just as Najib must come clean on those scandals, he must also come clean on his role in the RM18 billion missing GST refunds scandal. Bear in mind that only the finance minister can instruct that GST refunds be delayed beyond the legally stipulated two weeks period, or that GST payments be made into the consolidated revenue account instead of the Fund for GST refunds account under Section 54 of the GST Act 2014 (establishment of fund for GST refund) is as follows:

(1) A fund to be known as the Fund for Goods and Services Tax Refund (in this section referred to as “the Fund”) is established which shall be specified in and incorporated into the Second Schedule to the Financial Procedure Act 1957 [Act 61].

(2) There shall be paid into the Fund the amount of tax collected under this Act as may be authorised by the Minister.

(3) The moneys of the Fund shall be applied for the making of any refund under section 38 and Part VII.

(4) The Fund shall be administered by the Accountant General of Malaysia.

(5) Notwithstanding subsection (2) and the provisions of the Financial Procedure Act 1957, the Minister may authorise the payment into the Consolidated Revenue Account in the Federal Consolidated Fund of all or part of the moneys of the Fund.

Did Najib give authority to then treasury secretary-general Mohd Irwan Serigar Abdullah not to transfer RM18 billion into the GST refunds trust account? Like his former boss, the former treasury secretary-general has also not been completely truthful with the facts when he claimed that all GST payments are made into the Consolidated Revenue account, but did not explain why he refused to transfer RM 18 billion into the GST refund trust account.

Yesterday, the Royal Customs Department director-general T Subromaniam publicly stated that he had requested for a total of RM82.9 billion to be transferred to the GST refund trust account at the monthly Trust Fund committee meeting chaired by Irwan since 2015.

This was not done by Irwan. Despite the Customs Department making requests during the monthly meetings, Subromaniam confirmed that RM19.4 billion had still not been transferred in full as at May 31, this year.

If Irwan denies that the GST refunds payments are missing, why is it that taxpayers are still unable to receive their refunds, some for as long as three years?

Clearly, the refunds were not transferred and paid back to the taxpayers because the previous government had recognised such payments as revenue and used it to cover up their deficit or pay for both operational and development expenses.

This is wrong because the refunds are not government money or revenue to be used as the government deems fit, but are taxpayers’ money that must be returned to them.

A full report of the internal inquiry headed by the new Treasury secretary-general Ismail Bakar will be submitted. Then, a proposal will be made to both the prime minister and cabinet to conduct an open inquiry headed by independent professionals.

The Finance Ministry will also cooperate with any authorities investigating this matter.

LIM GUAN ENG is finance minister, DAP secretary-general and Bagan MP. 

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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