Lower GST a better option than SST — PSB Pujut chief

(Borneo Post) – The Pakatan Harapan (PH) federal government should have reduced the rate of Goods and Service Tax (GST) instead of introducing the Sales and Service Tax (SST) which has not resulted in the lowering of costs.

In expressing this view, Parti Sarawak Bersatu (PSB) Pujut chairman Bruce Chai said he agreed with the finding of a survey by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER) that cost of doing business by manufacturers has risen 10 per cent since the introduction of SST in 2018.

“It was done too hastily to fulfil their centre-piece election promise. They could have adopted the GST but bring down the rate,” he said.

He had previously stated that GST is a better and fairer mechanism of taxation and what the PH government had to do was to lower the rate.

“The six per cent GST practised by the previous BN government was not a fair rate and this caused inflationary effects to the economy,” he said.

In its manifesto for the May 9 general election last year, PH portrayed GST as bad for the economy and pledged to abolish it if it could form the federal government.

“The prices have not come down and that may be the reason for backtracking and offering to review SST and its mechanism,” Chai said.

Acknowledging that the goal of every government is to bring prices of goods and services down through taxation, he said the goal is hard to achieve.

“The result of taxation is always Inflation, something that we cannot avoid and perhaps the PH government is trying to re-look at SST and its mechanism and try to contain the inflationary effects,” he added.

The Star reported that the SST, which was introduced in September last year, has increased the cost of doing business among Malaysian manufacturers by up to 10 per cent.

Speaking at a briefing on the FMM-MIER Business Conditions Survey, FMM president Datuk Soh Thian Lai said about 85 per cent of Malaysian manufacturers witnessed a rise in production costs due to SST in the second half of 2018.

The main factor for the higher cost, according to 36 per cent of the respondents, was the SST rate on raw materials, components and services is higher than the GST.

Quoted by Malaysiakini on Thursday, Finance Minister Lim Guan Eng said he disagreed with the survey findings but did not deny problems pertaining to the SST due to its rapid implementation.

He said with the implementation of SST, Putrajaya had fulfilled its objective of ensuring the impact of price increases will be less compared to the GST era.