KUALA LUMPUR – Although the government stands to rake in higher tax revenue, the goods and services tax (GST) will reduce the people’s disposable income, Deputy Finance Minister I Datuk Abdul Rahim Bakri told the Dewan Rakyat today.
Rahim said the sales and service tax (SST) only collected RM21 billion a year, compared with RM44 billion through GST.
“The implementation of GST may increase government revenue, but it will reduce the people’s disposable income. The SST gives the people leeway because the system allows them to have more disposable income.”
He said under SST, inflation rate is controlled because the system requires a one-tier taxation system, compared to the multi-tiered GST.
He added that under SST, only 6,405 products are taxed, compared with 11,197 products under GST.
Rahim said before even considering reintroducing GST, the matter will be studied in detail.
However, Datuk Seri Ahmad Maslan (BN-Pontian) said GST is a better taxation system, after explaining that he is currently pursuing a PhD in GST at Universiti Malaya.
He added that under the SST system, the federal government is losing out on money due to various leakages.
He said these leakages come from unlicensed factories that produce goods without paying taxes and importers who fraudulently declare they bring in duty-free goods.
“Let’s say a product is RM100 and the tax rate is 10%, the Customs Department should receive RM10.
“However, some companies will sell the product to their subsidiary companies with a RM50 invoice, which means Customs will only get RM5.” – The Vibes, December 17, 2020
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