SST to stay, govt to adopt ‘good’ GST features

The government will retain the sales and service tax (SST) while incorporating “good” features of the goods and services tax (GST), deputy finance minister Liew Chin Tong said today.

Liew said the SST is easier to understand and has been in place for more than 50 years. He said the government would incorporate useful elements of the GST, including measures to prevent cascading and double taxation.

He also questioned whether the GST was necessarily a better system, saying it would require about 480,000 companies to act as tax-collecting agents, compared with about 80,000 under the SST.

“This is the difference between the two systems. What we want to create is a system where we do not disturb the majority,” he told the Dewan Rakyat.

Liew said the GST also allowed businesses to pass the tax directly on to consumers.

“What the government wants is a balance so that consumers are not disturbed and businesses are protected from cascading,” he said.

Liew was responding to Hamzah Zainudin (PN-Larut), who asked whether the government planned to retain the SST or introduce a new system combining elements of the SST and GST.

The opposition leader said businesses needed clarity to plan, citing mixed signals on whether the government would retain the SST, adopt a hybrid or return to the GST.

On Aug 18, Prime Minister Anwar Ibrahim said the government was prepared to study proposals to combine elements of the GST and SST, particularly features of the GST that could make taxation more efficient.

The GST, a multi-stage consumption tax, was introduced in April 2015 at a rate of 6% before being zero-rated in June 2018.

It was replaced with the SST in September 2018, in line with the manifesto of the administration led by Pakatan Harapan at the time.

The government has repeatedly dismissed calls to reinstate the GST, with the finance ministry saying this will only be considered when Malaysia’s median wage exceeds RM4,000.

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