wrapper

Hot Topics

Search - K2
Search - Categories
Search - Contacts
Search - Content
Search - News Feeds
Search - Web Links
Search - Advanced

MEDIA RELEASE

MINISTRY OF FINANCE MALAYSIA


UMNO And Datuk Seri Najib Tun Razak Must Explain How SST Burdens The People More As Compared To The GST When SST Collects RM21 Billion A Year, As Compared To The Projected RM44 Billion From GST.


UMNO and former Prime Minister Datuk Seri Najib Tun Razak must explain how Sales and Services Tax (SST) burdens the people more as compared to the Goods and Services Tax (SST) when SST collects RM21 billion a year, as compared to the projected RM44 billion from GST.

The Federal Government intends to revert to the previous system prior to the Goods and Services Tax (GST) by implementing the Sales and Services Tax (SST) on 1 September 2018. The SST will replace the GST, which will be repealed accordingly.

False claims by UMNO that the SST will burden the people even more than the GST is illogical when SST collects RM23 billion less than GST. According to them, my announcement that reverting to the old system of sales tax at 10% and services tax at 6% means that the tax rate would be at 16%; higher than the 6% GST. This is untrue, because we cannot simply add up the sales tax and services tax, which would be equating apples with oranges.

How could the SST burden the people more than the GST when the expected collection from the SST is estimated at only RM21 billion for a full year, while the GST had expected to collect RM44 billion in 2018, according to the previous government’s projection.

Hence, compared to the GST, the new Pakatan Harapan government has ‘returned’ RM23 billion to the rakyat. UMNO should try not to deceive the rakyat that they will be worse off with SST when the same SST system adopted by UMNO before 1 April 2015 did not cause hardship to the ordinary rakyat like the GST had done.

Here are several facts which will expose the fallacies being circulated today:

  1. The sales tax at a rate of 5% AND 10% applies to selected manufactured and imported products, and not all products, unlike the GST.
  2. The 6% Service Tax applies to selected services and not all services, unlike the GST.
  3. The Sales Tax is imposed on manufacturers’ and importers’ price, while the GST is imposed on the final consumer price. Hence it is wrong to claim that a “10% Sales Tax is higher than a 6% GST”.

 

For example, a manufacturer imposes a 10% Sales Tax (RM0.10) 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% GST of RM0.12 would have been imposed. In this case, it is clear that a 6% GST at RM0.12 would be higher than a 10% SST.

In addition, the Ministry of Finance has undertaken a comprehensive SST review exercise with the assistance of accounting firm Pricewaterhouse Coopers (PwC) tax consultants to simplify SST. PwC will help rationalize tax collection and reporting requirements to ensure that the SST will be even more efficient and less bureaucratic than the GST, or even the old SST system. PwC will ensure the SST imposed on 1 September 2018 to be simpler, less cumbersome, prevent leakages and loopholes.

Unlike the GST, which burdens the poor proportionately more, the new SST will also be tweaked and designed to ensure that the impact on the lower income groups will be proportionately less. The details of the improvements will be announced when the new SST Bill is tabled in Parliament during the current sitting.


Sayangi Malaysiaku!

LIM GUAN ENG
Minister of Finance
Putrajaya
17 July 2018


Template Settings

Color

For each color, the params below will give default values
Blue Green Red Radian
Select menu
Google Font
Body Font-size
Body Font-family