Just reinstate 'efficient, fair' GST, MCA veep tells govt amid SST expansion

Summary

• MCA vice-president Lawrence Low urges Putrajaya to reintroduce the GST instead of expanding the SST.

• He says GST is more reliable and has mechanisms to prevent double taxation, among others.

• Low also cautions the govt of a rise in inflationary pressures if SST expansion is implemented.

MCA has urged the government to reintroduce the Goods and Services Tax (GST) instead of expanding the current Sales and Services Tax (SST) to cover more products and services.

“The government’s approach of continuously widening the SST tax net, without addressing underlying issues, will increase the burden on businesses and consumers, without solving the core problem of a weak national tax base.

“Rather than continually introducing new or ‘refined’ taxes, it would be more sensible to take a step back and reconsider the implementation of a fair, transparent and efficient GST system,” MCA vice-president Lawrence Low said in a statement today.

This came after Finance Minister II Amir Hamzah Azizan announced yesterday that SST will be revised to between five and 10 percent for non-essential and premium items beginning July 1.

Earlier today, it was reported that, among others, even imported fruits like apples would be slapped with a five percent SST as it is categorised under the non-essential list.

Apart from that, a six percent tax will be imposed on private preschool, primary and secondary education where annual tuition exceeds RM60,000 per student.

Burden to public

Unimpressed, Low (above) argued that while the new SST rates were presented as focusing on “exempting basic services” to ease the burden on the public, it was not necessarily the case.

For example, the MCA leader said sectors such as education, financial transactions and beauty and healthcare have been included in the taxation bracket, which are essential to urban middle-class families.

“For instance, non-residential rental services, beauty treatments, private education and medical services for expatriates may not seem essential at first glance.

“However, these services have become an integral part of the daily lives of urban middle-class families and small businesses,” Low said.

With the additional costs being passed to consumers, Low said it would eventually lead to an inflationary chain effect.

Efficient GST

In contrast, he said, GST has broad coverage and a solid rebate mechanism, which would help in deterring double taxation, unlike the SST.

“It increases transparency and builds trust in the system. For businesses, input tax credits help reduce cost pressures.

“For consumers, clear price tags and transparent tax amounts make the system more understandable and acceptable compared to the current SST, where costs are often hidden and passed on in an unclear manner.

“For the country, the GST system supports long-term revenue growth.

“While we’re not opposed to tax reforms, it must be based on science and pragmatism. After adjustments, particularly to the refund system, GST could be a far more effective tax system,” said Low.

Former prime minister Najib Abdul Razak introduced GST in 2015, aimed at increasing the nation’s tax revenue and reducing evasion.

However, it was scrapped in 2018 during the first Pakatan Harapan government led by Dr Mahathir Mohamad.

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