LAST_UPDATETue, 17 Jul 2018 10pm

Pakatan’s SST Will Not Relieve People’s Burden, Senseless For The Future

Photo: Director-General of the Customs Department, Datuk Subromaniam Tholasy Photo: Director-General of the Customs Department, Datuk Subromaniam Tholasy

Pakatan Harapan had unveiled an election manifesto earlier this month stating that they will restore the Sales and Service Tax (SST) after abolishing the Goods and Services Tax (GST) within the first 100 days of its administration.

While the Prime Minister had pointed out earlier that Malaysia will only be a deficit country with this move and would be in the same boat as Greece and Italy, Customs Department director-general Datuk Subromaniam Tholasy yesterday highlighted to The Star that restoring SST will only cause prices of goods to be more costly.

Subromaniam said that GST had eliminated the double taxation under SST, and views reverting to the latter as a double whammy because “businesses will again try to profiteer and we will see another round of inflation due to the change in the system,” while the cost will be passed on to consumers and they will be charged higher prices.

“Under GST, there is greater transparency as consumers will know exactly whether the goods they consume are subject to tax and the amount to pay for,” he clarified, emphasising that GST also reduces the effect of the black market.

“Who are you trying to protect? Unscrupulous businesses that like to hide and keep a few accounts?” questioned the man who owns an honours degree in nuclear physics and in finance.

This point was also stressed in a report by Kwong Wah Daily and translated by Malaysian Chinese News which states, although in its alternative budget, Pakatan proposed that they would raise corporate income tax, property gains tax, and road tax to compensate for the loss of revenue with the abolition of GST, “This kind of idea would not really relieve people’s burden.”

“The restoration of SST would lead to an outflow of “black” money. After 2015, Malaysia is no more among the top 10 countries with the highest outflow of black money.

“This proves that GST is a better tax mechanism as traders become more competitive without having to face double-taxation problems,” the report stated.

To date, GST has been implemented in more than 160 countries and not a single one has made a U-turn back to SST, as the former is proven to be an effective and progressive tax.

Annually, Malaysia collects RM40 billion through GST, with its revenue channelled to the people, for development, healthcare, infrastructure, among other subsidies.

And according to Subromaniam, “GST is also a tax for the future as the entire world is moving towards e-commerce and the digital economy.

“It is a huge potential in terms of revenue, so it doesn’t make sense to revert to SST, which was unable to tax a new economy,” he said.