KUALA LUMPUR: Malaysia will lose RM416.6bil in revenue if the Goods and Services Tax (GST), tolls, National Higher Education Fund Corp (PTPTN) loans and excise duty were abolished, said Ministry of Finance (MoF) Secretary-General, Tan Sri Dr Mohd Irwan Serigar Abdullah (pic).
He said the abolition of GST would cause the country to lose RM45bil while toll (RM338bil), PTPTN (RM3.9bil) and excise duty (RM2.4bil).
He said the abolition would also increase the country's debt.
"We will lose RM45bil if we eliminate GST. It's a big figure and we did not introduce it just like that, (but) we have been studying for years.
"A total of 160 countries in the world have implemented GST. There are various percentages, but in Malaysia, we take six percent - a more reasonable rate, not burdensome economy and people," he told reporters here Saturday.
Irwan said he was worried about recent newspaper and social media reports on the current economic conditions. "More than 500 basic items, among them, rice, sugar, vegetables and medical goods are not subjected to GST because the tax here is different from other countries. In India, which introduced GST after Malaysia, the rates are variable at between five-28 per cent," he said.
Irwan said Saudi Arabia would also introduce GST as it was too dependent on oil.
"When the oil prices dropped, the government's revenue would be unpredictable. In this respect, Saudi Arabia is in talks with experts from Malaysia to introduce the GST," he said. "When the GST was introduced in Malaysia on April 1, 2015, oil price fell from US$100 per barrel (US$1 = RM3.91) to less than US$40 per barrel and government's revenue fell. We cannot be in a state of uncertainty. We have to pay salaries, manage the state, hospitals, education and they need revenue," he said.
He said if the country did not collect revenue, the government could not implement national programmes and as the Malaysian economy grew, the revenue would increase and the country could bear the expenditure. "If we forgo the GST, then we will lose RM45bil and even if we were to re-introduce the sales and service tax (SST), the collection will amount to RM18bil, so how can we find the RM27bil?" Irwan said.
"On the toll, the MoF has to pay compensation to companies because they have investors, such as the Employees Provident Fund, which earn money which come from these tolls.
"In the Klang Valley there are 19 tolls, while outside the Klang Valley there are 12. If the government wants to step in, we have to pay RM338bil," he said. "If we add the RM338bil with national debt of RM686bil, our debt will increase to RM1 trillion, and if we divide the size of Malaysia's RM1.3 trillion economy, it means that our country's debt has risen to 78 per cent," he said.
Irwan said Malaysia had a policy where national debt should not exceed 55 per cent of gross domestic product, which was now at around 50 per cent. "When we are in debt, the rating agencies will rate us. Now we are at 'A-', a strong rating. The investors will come when the nation is stable. However, if the debt grows bigger investors will not invest and the economy will be unstable," he said.
On PTPTN loans, Irwan said, the government also gave relief.
"If the student's score is good, he does not have to pay back PTPTN, and if it was consistent in paying, PTPTN will give 10 to 20 per cent discount," he said.
He said the country's economy was on track in terms of financial management and has recorded a growth of 5.9 per cent last year.
"Our economy is on a solid track. It grew 5.9 per cent last year and this year we expect the economy to continue five - 5.5 per cent," he said.
He said the inflation rate was under control and expected two-three per cent this year while the unemployment rate was at a low of 3.4 per cent, as well as the ringgit strengthened at RM3.90 against the US dollar.
"We will keep this momentum," he said.
"I am a senior official of the Ministry of Finance, it is my responsibility to clarify the real situation of the economy," he said, adding that he has been with the MoF since 2002, and now has more than 15 years of experience making the government budget. - Bernama