Zero-rating GST and reverting to SST, a welcome move
SIBU: Reverting to the Sales and Services Tax (SST) is the right move at this time as the economic condition in the country is not conducive.
Former Meradong District councillor Datuk Felician Teo opined that, while government revenue will be reduced substantially, goods and services will cost less for the people without Goods and Services Tax (GST).
He pointed out that spending power will improve, which is beneficial to consumers.
“In the longer term and when the income level of the people is at a much higher level, GST can be reintroduced to collect more revenue for government coffers to benefit the country,” he told thesundaypost yesterday.
Teo was asked whether abolishment of GST and reintroduction of SST will have positive or negative impact for businesses and people.
Head of the Council of Eminent Persons, Tun Daim Zainuddin reportedly said the reintroduction of the SST would take place within two to three months.
The new PH government had earlier announced that the GST is set to be zero-rated from six per cent effective June 1, 2018.
On this, Teo said: “Basically, you collect more tax with GST as it is a wider tax base. Highest SST collection in 2014 was RM17 billion compared to GST collection of more than RM40 billion in 2016 and 2017.
“When we revert to SST, government revenue will be reduced substantially. However, goods and services will cost less for the rakyat without GST. Spending power will improve and that’s a benefit to consumers.”
Adding on, he said that economists can argue the pros and cons of either system.
“While GST brings in more revenue, the government must weigh that against the wider social impact of this tax system on the people particularly the lower income segment,” he highlighted.
Teo said with less revenue, government must cut back on wasteful spending and prioritise what they spend on.
“With the last administration, the PM’s department had a bloated budget, including too many ministers in the PM’s department. Civil service personnel need reducing and the BRIM handouts need to be abolished.
“What the rakyat needs is a more balanced approach to tax collection and public spending whichever tax system the government adopts. There is necessity to spend prudently and not unnecessarily burden the people. That is the ultimate responsibility of government.”
Businessman Robert Tan expounded that the government still keep the GST but at zero per cent instead of six per cent.
“So, instead of GST, the government reintroduced the SST. To me or businessmen, SST is an old method but not as efficient as GST which affects even small businessmen.
“The government will lose some revenue collections on SST and the public will not be much affected as compared to GST. We all love it. The government, in case one day they need more revenue they can raise the zero per cent GST to maybe two to three per cent which will not affect much,” he explained.
Tan figured that the GST or value-added tax (VAT) as it is called in other countries is not really bad but to start with six per cent is too much for the public to swallow and that sentiment had prompted the voters to vote for PH instead of BN.
“Right now, everyone on the street is happy at least they do not have to pay six per cent extra. Imagine a household owner like me, I will save the six per cent from electricity bill, telephone and streamyx subscription, and hand phone bill among others.
“Each household will save at least RM30 to RM100 per month,” he reckoned.