Guan Eng admits GST was an effective taxation system

KUALA LUMPUR: Finance Minister Lim Guan Eng has admitted that the Goods and Services Tax (GST) was an effective taxation system, but lamented its flawed refund mechanism.

“I don’t deny the formula on GST is good and this is acknowledged everywhere.

“But the problem is when the tax refunds are not paid on time,” he told reporters during a press conference at Parliament lobby on Thursday (July 19).

According to Lim, delays in issuing tax refunds have adversely affected many businesses in their ability to deliver goods and services efficiently.

“It has caused many businesses to factor in these delays into their products and services. 

“This has actually burdened the people,” he added.

Lim argued that the Sales and Service Tax (SST) is a more transparent taxation system compared with the GST, as it is easier to collect the right amount of taxes.

“All we need is to ensure compliance. I’ve spoken to the Customs director-general, and he said collection enforcement must be improved."

On ensuring proper enforcement once the SST takes effect in September, Lim said that was under the purview of the Domestic Trade, Cooperatives and Consumerism Ministry.

On the impact the transition would have on businesses, Lim said the Customs Department had been instructed to take the appropriate measures.

On Tuesday, Rembau MP Khairy Jamaluddin urged the Government not to scrape the GST because of politics, saying that the GST is more efficient than the SST.

“Am aware GST is big political issue for govt (sic) but they must approach the issue rationally. Don’t scrap GST because of politics,” he tweted.

“Adjust the rate so it's revenue neutral to your SST. Don’t let politics determine economic policy.

“GST) could be set at 3-4%. SST is inefficient with many leakages,” the Umno lawmaker said.