GEORGE TOWN: The Penang Government recently said it has ordered its two local councils to absorb RM19.36mil in chargeable Goods and Services Tax (GST) a year on local services such as public parking fees, but not all are buying it.
Shortly after Chief Minister Lim Guan Eng held a press conference to announce this, a political commentator with the pseudonym Lim Sian See questioned the announcement on Facebook.
“Under the GST Act, assessment rates and the vast majority of local council services … are exempt from GST,” Sian See wrote.
Guan Eng had said the local councils - Penang Island City Council (MBPP) and Seberang Prai Municipal Council (MPSP) – would absorb the GST on the public parking fee of 80 sen per hour on the island.
But in his Facebook post, Sian See pointed out that the parking fee of 80 sen an hour had always included a 6% tax.
"You can check this yourself. If you look at a pre-GST Penang council parking coupon costing 80sen per hour, it is clearly stated on the coupon itself that the price includes Service Tax. It is also clearly written on a post-GST parking coupon which also cost 80sen per hour, that the price is inclusive of the 6% GST.
“Before GST was implemented on April 1, 2015, it was the 6% Service Tax. After that, it was replaced by the GST,” Sian See wrote, triggering a string of shocked replies from people following his page.
Sian See said that since 2013, the state’s parking services had already been outsourced to a private company called Alam Indah Sdn Bhd. The GST applies since it is a private company.
“The parking rate of 80 sen per hour is the same before and after GST started. Hence, there is no (absorption) nor exemption of any GST,” Sian See said.
He said that if Guan Eng still wanted to claim that the state is absorbing the GST, he could add an extra 3.83 minutes of parking time for each hourly coupon.
He also pointed out that it was an offence not to charge GST if it was due.
When asked, MBPP Financial Committee alternate chairman Joseph Ng maintained that the city council absorbed GST on all of its services and rentals, including public parking rates.
Instead of raising prices to account for GST, he said the council kept its rates the same.
“If we rented a hall for RM400 a day, it should be RM424 with the GST, but we didn’t increase it.
“So we effectively decreased our collection to RM376 for the hall rental and remit RM24 as GST to the Federal Government,” he said.
Guan Eng also told reporters that besides absorbing GST, the two councils reduced its collection of assessment rates amounting to savings of about RM55.2mil for Penangites.
He said about 80,000 low-cost, low-medium cost and village homes on the island this year were fully exempted from paying assessments, amounting to about RM8.06mil or an average of RM100 saved per household.
He said 200,000 owners of other types of property, including commercial and industrial lots, were getting a 6% discount off their assessments on the island.
That amounts to about RM12mil or an average savings of RM60 per property.
But Sian See pointed out that assessment rates for residential and commercial properties in Penang were increased by 1% in January, 2015, four months before the GST took effect.
“Percentages can be tricky and deftly used as propaganda.
“Assume that GST increases (by two percentage points) - from 6% to 8%. This means the amount for a RM100 item goes up from RM6 to RM8, hence an increase of 33%.
“(The) same thing with the assessment rate. It means the amount payable is a bigger difference,” he said.