THE government’s reluctance to reintroduce the Goods and Services Tax (GST) has led to new taxes, utility cost climbs and subsidy cuts for essentials thus driving successive price hikes, said MCA.

Its vice president Datuk Seri Dr Wee Jeck Seng said this in response to Finance Minister II Datuk Seri Amir Hamzah Azizan’s announcement in the Dewan Rakyat on Tuesday (July 16) that the government has no plans to revive the GST, which was abolished in 2018, due to its broad application as a consumption tax.

In response to a query from Langkawi MP Datuk Mohd Suhaimi Abdullah, Amir also said it is deemed inappropriate to reintroduce the controversial tax especially considering the financial challenges faced by individuals with lower incomes.

“This reasoning appears contradictory and problematic. The government’s reluctance to reinstate GST has led to new taxes, tax hikes, wider scope of taxes, increase in utility costs and subsidy cuts for essential items, driving successive price hikes,” Wee, who is the Tanjung Piai MP, said in a statement on Thursday (July 18).

“These price hikes over the past year worsened livelihoods, yet the government uses this burden as grounds against GST, a cycle it created.”

The Finance Ministry had also revealed that the GST excels in transparency, revenue, tax evasion control, export costs, consumers impact, inflation, and reducing underground economy losses.

“The GST under the Barisan Nasional administration which was introduced in 2015 before it was abolished in May 2018 yielded RM44 bil in government revenue in 2017,” Wee stated.

“The Sales & Service Tax (SST) which was introduced in 2018 saw its rates being raised to 8% this March while expanding taxable areas. It projects RM35.8 bil next year, showing no ease in burdens or revenue gains - a lose-lose scenario for both our national coffers and citizens.”

According to Wee, both the World Bank and economic experts had preferred the GST over the SST, with the latter being a significant revenue source for over 160 countries worldwide, contributing more than 30% of the total tax revenue on average.

However, in contrast, Malaysia’s SST only contributes 11% of revenue.

“The government clearly knows and openly acknowledges that GST is a better tax system than SST, yet it persists in not reinstating GST, causing confusion in its policy logic,” Wee lamented.

“We urge the government to recognise the reasons for the pressures on people’s livelihoods, which stem from the government’s indecisiveness and failure to grasp reality in fiscal management.

“Only by decisively setting aside political biases and reinstating the GST can our national Treasury be replenished, thereby protecting the low-income groups.” - July 18, 2024 

https://focusmalaysia.my/mca-persistent-resistance-against-gst-reinstatement-a-lose-lose-situation-for-govt-people/