Ex-deputy minister: Cost of living will increase

KUALA LUMPUR: The Sales and Services Tax (SST) will bring more harm than benefits as manufacturers will hike the price of goods to cover the 10 per cent SST.

Former deputy finance minister Datuk Seri Ahmad Maslan said the move to reintroduce SST was a “double blow” as it burdened people and the country.

He said factories would not be willing to absorb the 10 per cent SST as the cost would be transferred to the wholesalers, and cause the costs to cascade to traders and then to consumers.

“A factory producing a wooden table at a cost of RM100 will be charged 10 per cent for SST, bumping up the cost to RM110. It will then sell it to the wholesaler for RM115, and the wholesaler will sell it to the trader for RM120.

“How much do you think the trader will sell to consumers? Let’s say RM130. On top of that, consumers will need to pay 10 per cent for SST. The price you buy at the shop will be RM143.

“That’s just a simple example. We don’t really know how business owners will increase their prices,” Ahmad told the New Straits Times at the Parliament lobby yesterday.

He said GST allowed manufacturers, wholesalers and traders to claim input tax, which meant their costs would be less.

The Pontian member of parliament said under GST, businesses could not cheat the system and evade paying actual tax rates.

He said the government was making a mistake by abolishing GST, which collected RM44 billion yearly.

“SST’s revenue is estimated to be half of that, meaning the government will have less money to spend. The government will not be able to spend on development, assistance and facilities for the people and nation.

“Cost of living will increase. For items that are zero-rated, once SST comes into place, it is only natural that their prices will increase,” said Ahmad, who was in the Finance Ministry when GST was implemented in 2015.

Ahmad, a deputy international trade and industry minister between July 2015 and May, said if SST was imposed on exports goods, Malaysia would be less competitive on the global front.

Export goods are zero-rated under GST.

“A total of 172 countries use GST and their export items are zero-rated. Export will be affected, the people will be affected and the government’s income will be affected.

“Who will benefit from this? Traders and businesses that have been short-changing the government will benefit.”

He said there was no way the Finance Ministry could make SST better by “improving it” because GST had been the solution to problems in SST.

He urged the Pakatan Harapan government to swallow the bitter truth and put its manifesto aside.

“The best option is to continue with GST and stabilise prices of goods and services.

“They speak of transparency and effectiveness. This is their opportunity to prove this. You have the power to make a change.”