FINANCE Minister Lim Guan Eng today admitted that some goods and services had increased in price under the sales and services tax (SST) regime but argued that the price hikes could have been worse if the goods and services tax (GST) was still in effect instead.

To questions on the SST at the Dewan Rakyat this morning, he said the situation with price hikes would be worse if the latter was maintained by the administration.

“I don’t deny that there are some price increases. But be fair. There are also price reductions like for cars.

“If we still have the GST, we can expect prices not to come down, but go up at rates higher than what we see under the SST regime,” Lim said to Annuar Musa (Ketereh-BN) during question time.

“Furthermore with the global market conditions now, the situation would have been worse with the GST. SST is easier on the people; and this is what the Pakatan Harapan government want for the people, unlike the previous administration that popularised GST.”

Annuar had asked Lim to explain why the SST, which was first implemented in the 1970s, was still confusing and burdensome to the people.

Lim reiterated that SST was imposed on fewer items – 6,405 items compared with the GST’s 11,197.

There were also 5,443 items exempted from SST, 10 times more than the 545 items exempted from GST, he said.

He said the government would collect RM21 billion from SST instead of RM44 billion from GST, leaving Malaysians withmore money to spend.

Lim said he did not want to cause confusion that SST would bring prices down.

He said if there were price increases under SST, its impact was smaller than the GST’s.

He cited how year-to-year Consumer Price Index figures last year and this year had shown that GST had led to inflation.

In June, July and August last year, the CPI was at 3.6%, 3.2% and 3.7% respectively when GST was still implemented.

But after GST was zero-rated in June this year, the CPI went down to 0.8%, 0.9% and 0.2% until August before SST was implement last month.

“The CPI numbers are based on the average prices. It is not the same for all items but we hope can see the impact (across the board).

“Maybe we need to start an initiative to explain this to the people. Perhaps MPs can assist the government on this so that the people are not confused and duped by irresponsible parties,” Lim said.

Lim also told Annuar that GST, despite being a more efficient tax than SST, had embedded weaknesses that allowed the consumption tax to be abused.

He said businesses applying for input tax refunds were not paid back the money due to them, which became an issue leading to price increases.

“RM19.4 billion was not paid back even though businesses were to be refunded in two weeks. The money was used by the former government without the people’s knowledge,” he said. – October 18, 2018.