SST will not burden the people – Guan Eng

KUALA LUMPUR: The Sales and Services Tax (SST) will not burden the people more than the Goods and Services Tax (GST) as the government will only collect RM21 billion a year and “return” the RM23 billion difference to them, Finance Minister Lim Guan Eng said.

He said the expected collection from SST was estimated at only RM21 billion for a full year compared with the previous government’s projected GST collection of RM44 billion for 2018.

“The false claim by Umno that SST will burden the people even more than GST is illogical.

“According to them, my announcement that reverting to the old system of Sales Tax at 10 per cent and Services Tax at 6 per cent means that the tax rate would be at 16 per cent, higher than the 6 per cent GST,” he said in a statement.

It was untrue, he said, as one could not simply add the sales tax and services tax together, “which would be equating apples with oranges.”

The Pakatan Harapan-led government intends to revert to SST -- the system prior to GST -- on Sept 1 and accordingly repeal GST.

Lim, who was responding to misconceptions being circulated yesterday, said the Sales Tax at a rate of 5 per cent and 10 per cent applied to selected manufactured and imported products, and not all products, unlike GST.

As for the 6 per cent Services Tax, he said it applied to selected services and not all services, unlike GST.

Lim also noted that the Sales Tax was imposed on manufacturers’ and importers’ prices, while GST was imposed on the final consumer prices.

“Hence it is wrong to claim that a 10 per cent Sales Tax is higher than a 6 per cent GST,” he said.

Lim gave the example of a manufacturer imposing a 10 per cent Sales Tax (10 sen) on a can of soft drink manufactured for RM1.00.

“However, when the same can is sold to a consumer at 7-Eleven for RM2.00, a 6 per cent GST of 12 sen would have been imposed. In this case, it is clear that a 6 per cent GST, at 12 sen, would be higher than a 10 per cent SST,” he explained.

According to Lim, the Finance Ministry has undertaken a comprehensive SST review exercise with the assistance of tax consultants from Pricewaterhouse Coopers (PwC) to simplify SST.