GST abolition helped contain inflation, says Lim

PUTRAJAYA: Amid calls for the Goods and Services Tax (GST) to be reinstated, the Finance Minister maintains that eliminating it helped contain inflation.

Lim Guan Eng said abolishing GST last year had a positive impact, with Malaysia having one of the lowest inflation rates in the world at 1.5% last month.

He said the inflation rate was not expected to exceed that figure this year.

“Abolishing GST had its impact. If you allow it to come back at 6%, then I think we will see inflation going up, ” he said after attending the ministry’s monthly assembly here yesterday.

Tun Dr Mahathir Mohamad had said that the government would study calls to reinstate the GST if the people wanted it.

The Malaysian Institute of Economic Research had earlier suggested that the government reintroduce the GST but at a lower rate of 3%.

The GST was replaced last Sept 1 by the Sales and Service Tax (SST).

Lim said that in the last election, it was evident that the people had voted out the 6% GST introduced by the Barisan Nasional government in 2015.

“We stood in the last general election on the mandate of “No GST”. We have delivered on the promise to abolish 6% GST.

“Unless there is incontrovertible evidence that this (reinstating GST) is the will of the people, I think we have to respect the mandate given by Malaysians, ” he said.

However, he said any decision to bring back the abolished GST would be made by the Pakatan presidential council.

Lim also said that the government was making “difficult and painful” progress in the reduction of the country’s RM1 trillion debt.

“It cannot be resolved overnight but we have to stop it going up and continue borrowing to fund development, ” he said.

Lim said he was not aware of a proposal by Asian private equity group RRJ Capital to buy over Khazanah Nasional Bhd’s share in PLUS Bhd.He said the ministry had received other proposals from Khazanah on the matter but did not elaborate.

“The other proposals by Khazanah are much more attractive and beneficial to the people. When you have proposals from a business, one must not forget the profit element.“Whereas proposals from Khazanah do not have that, so it will be better for the people when there is no profit element, ” he added.