KUALA LUMPUR: The Bills on the Sales and Service Tax (SST) sailed through the Dewan Negara, which is majority-controlled by the opposition, without hiccups, paving the way for the return of SST on Sept 1.
The latest development put to rest fears that the Bills tabled by the Pakatan Harapan-led government could be delayed at the upper House.
The legislation, which is crucial to increase the coffers of the federal government, was passed after seven hours of debates in the Dewan Negara.
The Sales Tax Bill, Service Tax Bill, Goods and Services Tax (GST) (Repeal) Bill, Customs (Amendment) Bill and Free Zones (Amendment) Bill were all passed without much objection from opposition senators.
Had the Dewan Negara rejected the Bills, the implementation of SST would have been delayed by up to a month, further denting the federal government’s coffers.
When Pakatan came to power following the 14th General Election, it abolished GST effective June 1 and announced that SST would start from Sept 1, hence giving businesses and consumers a three-month tax holiday.
The previous Barisan government imposed GST on April 1, 2015.
“We did not want to delay or disrupt the government with regard to revenue collection,” said Barisan senator Khairul Azwan Harun.
“We are aware that the revenue is needed to administer the nation.
“Generally, that is why we allowed the Bills to be passed,” the Umno lawmaker told a press conference in Parliament yesterday.
Khairul Azwan said Barisan senators were aware that it would be futile to try and block the Bills.
“We know that under Article 68 of the Federal Constitution, monetary Bills can be brought directly to the King for his consent.
“If we did not support the Bills, the government could still get them passed,” he added.
Khairul Azwan said the question of how many senators voted against or for the Bill was immaterial.
“What is important is that Senate has passed the Bills in line with Pakatan’s aspiration,” he said.
But he noted that Pakatan would now have to bear the responsibility of SST’s impact on the people.
There are 33 Barisan and three PAS senators out of 55 in the Dewan Negara.
The Dewan Rakyat passed the Sales Tax Bill 2018 on Aug 14, while the Service Tax Bill 2018 and three related Bills were passed the next day.
Finance Minister Lim Guan Eng, in his winding-up speech on the Sales Tax Bill, said the government was prepared to consider views raised by senators during the debates and would expand the list of items exempted under SST or include items to be taxed.
“We are prepared to listen and accept the views raised by senators. Whether you want the item to be included or not, you can submit it in writing to the ministry or the Customs Department,” he said.
Lim was responding to a question made by senator Bathmavathi Krishnan, who requested that associations for persons with special disabilities be allowed to import equipment and oxygen tanks free of SST.
Senator Datuk Ong Chong Swen wanted to know why certain luxury items such as jewellery, Norwegian lobster and pate were excluded from SST.
To a question by Datuk Seri Ti Lian Ker, Lim said tobacco leaves were not included because they were deemed agricultural products rather than manufactured cigarettes.
Lim also said he could not give a guarantee that prices of items would go down following the implementation of SST.
“I never said that SST would lower the prices of goods, but that the effect would be less than that of GST. I do not want to be like a former finance minister who made predictions that prices would go down when GST was implemented,” said Lim.
He explained that the prices of goods when SST is implemented would also be determined by other structural factors, including global oil prices.
Asked by Khairul Azwan whether the government would announce lower corporate tax in the upcoming Budget 2019 for local companies, Lim said that would depend on the fiscal and financial status of the government.
“At the moment, we are unable to do it but this is the direction we are headed in,” he said, adding that lower corporate tax would spur the private sector’s participation in driving the nation’s economy.
Earlier, Lim said the government hoped more people would be able to enjoy the RM17bil which will be returned to them this year and an additional RM23bil next year, following the abolition of GST.
“Prices of goods will be monitored when SST is imposed although the increase will not be as high as GST.
“At the same time, the federal government is studying structural problems in the domestic economy such as the power of monopolies, which is burdening consumers,” he said.
With the SST Bill finally passed, business associations and consumers predict a rush of buying over the next two weeks before the tax returns.
SME Association of Malaysia Datuk Michael Kang said sales for businesses should increase over the next two weeks before SST kicks in.
“We expect a 30% increase for big-ticket items like cars and furniture,” he said.
He urged small and medium enterprises to prepare themselves to roll out SST by getting their systems ready and checking which goods are exempted to ensure that they do not increase the prices of such products.
Malaysia Retail Chain Association Datuk Garry Chua said sales for high-value purchases would rise significantly as the tax break draws to a close.
“We see retail sales already doing well from June to July, especially for big-ticket items like cars and electronic stuff,” he said.
Engineer Johnny Lim, 27, said he took advantage of the tax break by buying some attire two weeks ago.
“I bought some much-needed clothes like a jacket, socks and shirts before SST kicks in,” he said, adding that he even enjoyed a RM10 discount for the jacket.
He is planning to drop by a few more clothing stores over the next two weeks to purchase sportswear as well.
Administration assistant Mary Chan said she was rushing to settle payment for her house renovations before Sept 1.
“I’m signing my contract for renovations to my bathroom and kitchen before my contractor starts charging SST for my bill,” said the 65-year-old mother of three.