Two more states order councils to absorb GST

GEORGE TOWN: The Penang and Terengganu state governments have followed the move by the Johor government and ordered their local councils to stop charging the Goods and Services Tax (GST) for their services to the public.

Chief Minister Lim Guan Eng said Penang’s two local councils have been directed to absorb the RM2.1mil in GST imposed on the public for services from July 1.

He added that the Penang City Municipal Council (MBPP) and Seberang Prai Municipal Council (MPSP) will absorb RM1.23mil and RM863,000 respectively.

“The state executive council has decided to absorb the 6% GST on services, such as rental and parking, hawker centre stalls, community halls and others.

“We will reimburse the Customs Department instead of passing it to the people,” he said at the sidelines of the state legislative assembly yesterday.

Besides RM2.1mil, Lim said the MBPP and MPSP also had to pay RM14.4mil and RM5mil respectively in GST for carrying out infrastructure and community projects in the state.

“It is an injustice to pay GST for projects meant to benefit the rakyat. We have also applied for the amount to be exempted from GST.

“I have written to Datuk Seri Najib Tun Razak, who is also Finance Minister, on the matter, but there’s been no reply,” he added.

Penang Barisan Nasional chairman Teng Chan Yeow said Lim was confusing the people by claiming that the state government needed to pay GST on its operating budget such as salaries and pension payments which were actually tax-exempted.

“The state’s RM100.25mil operating budget is not taxable under the GST, but its administration expenditure for daily operation is.”

In Kuala Terengganu, the state government will absorb RM1.6mil in GST imposed on services provided by the local government for this year.

Mentri Besar Datuk Seri Ahmad Razif Abdul Rahman said that nine components of services would be absorbed and these included rentals, leases and fees under the state government’s seven local councils.

“The state government has decided to absorb the GST costs for local councils, which are expected to be RM1.6mil, involving all seven local councils this year. This will be effective immediately today (Monday),” he said in a statement.

On Saturday, Johor Housing and Local Government exco member Datuk Abdul Latiff Bandi said all 16 of the state’s local councils would stop charging the GST for services to the public.