He said the country would experience a shortfall of RM4 billion in revenue if the SST were not rolled out and this would place a heavy toll on the government's economic performance.
"If we do not do this, there will be no revenue to cover the operating expenditure like paying salaries for government servants or building maintenance," he said during a briefing on the SST for the media here today.
Although the government has faced several hiccups in implementing the new tax regime, Lim assured that the issues would be resolved. Lim said the government hoped inflation would not be more than two per cent despite the implementation of the tax regime.
"Last year, our inflation rate was at 3.7 per cent. This year, we are happy with two per cent," he said.
Bank Negara Malaysia has previously projected that the inflation level to average between two and three per cent.
As the expected collection from the SST is estimated at RM21 billion for a full year, while revenue from the GST is expected to generate RM42 billion, Lim said the shortfall would be covered by higher income from Petroliam Nasional Bhd (Petronas) and Khazanah Nasional Bhd, as well as by reviewing mega projects.
"The oil price has hovered between US$77 per barrel. This will give us more income for now," he said. Brent crude today stands at US77.73 per barrel. Meanwhile, Royal Malaysian Customs Department Director-General Datuk T. Subromaniam said that items purchased during the tax-free period would still be taxed if they were delivered after the SST re-implementation.
This is in accordance with the law, as a service performed after the date of implementation (Sept 1) is subject to tax, he said, adding that, “It is not free as it has been stated in the law." Subromaniam was commenting on cash rebates and discounts offered by various companies during the tax-free period, enticing consumers to take advantage of the situation to buy big-ticket items such as cars.
Pointing out that tax is only one of the components that influence prices, he said that there were many other determining factors.
"At this point, we will cooperate with the Ministry of Domestic Trade and Consumer Affairs in monitoring the prices after the SST implementation this Saturday," he said.
Only 38 per cent of the consumer price index goods would be taxed under the SST compared with 60 per cent under the GST.
Under the SST, 85 per cent of businesses, especially small and medium enterprises, will be out of the tax net, while the annual sales threshold for eligibility to register for the sales tax will be increased to RM500,000.
So far 79,996 businesses have registered with the Customs Department through Auto Transfer System from MyGST to MySST. - Bernama