PUTRAJAYA, Oct 4 — Lim Guan Eng today assured Malaysians that the controversial goods and services tax (GST) will not return unless there is indisputable proof that the public is in favour of it.
The finance minister said the Pakatan Harapan (PH) coalition won the last general election on the promise to abolish the consumption tax, which it did and has since replaced with the sales and services tax (SST).
“We stood at the last election on the mandate of no GST. We delivered our promise in abolishing the 6 per cent GST. If people want to revive the 6 per cent GST, like Tun Dr Mahathir said, we have to revive it, but there needs to be a clear mandate from the people,” he told a news conference here.
“Unless there is incontrovertible evidence, we cannot defy the mandate of the people,” he added.
Asked if the government will make a policy change after “incontrovertible evidence” from the public, Lim said the decision must be jointly made by the PH presidential council.
“They will decide but until that decision is made, we have to respect the mandate of the people who voted PH. We have delivered on the promise to abolish the GST and we have managed to control the inflation rate,” he said.
Lim added that he has not received any instructions from Prime Minister Tun Dr Mahathir Mohamad on the matter.
Dr Mahathir told a news conference yesterday that his government will study calls to bring back the GST and see if it was indeed more effective than the SST.
Malaysian Institute of Economic Research chairman Tan Sri Kamal Salih mooted the return of the consumption tax introduced in April 2015 by the Najib administration, but at a reduced rate of 3 per cent, saying the unpopular tax had brought in much needed revenue that kept the government afloat when world crude oil prices fell.
But Lim said bringing back GST now may burden taxpayers even if it did enrich the Treasury.
“By abolishing GST, we have made an impact in containing the cost of living and inflation rate,” he said.
According to Lim, Malaysia has one of the lowest inflation rates in the region, even registering a negative rate for a few months earlier. Last month’s inflation rate stood at 1.5 per cent.
“By abolishing GST, we have managed to rein in inflation. If we allow the 6 per cent GST to come back, we can see inflation going up,” he said.
Asked how the government planned to increase its revenue, Lim explained that the RM44 billion raised through GST was actually the gross collection.
He elaborated that the RM44 billion had also included the refunds which was never paid back to taxpayers, which he described as the same as cheating.
The net figure for GST collection under the Barisan Nasional was only around RM33 to RM34 billion, Lim said.