PAKATAN Harapan believes it can run the federal government without revenue from the goods and services tax (GST), and instead add another RM6 billion to the country’s coffers through collection from other taxes and cutting down on wastage.

The GST is projected to bring in RM42 billion in 2018 for the government but Pakatan leaders today said that, according to their calculations, it could make up this loss in revenue and make a surplus of RM6 billion.

This, the leaders said, will be from higher collections from other taxes and duties that are the effect of a consumption boom in cars, property and imported goods.

In it alternative 2018 budget unveiled today, PH said it is also expected to save RM20 billion in government spending by cutting wastage and corruption that it claims goes on in the ruling Barisan Nasional administration.

In a press conference, Wong said the GST rate will be brought down gradually over a period of one year from the present 6% to zero. The accounting system however, will be maintained as businesses and the government had invested money to set it up.

“We will do it progressively over a year so as to not shock the system. But we aim to totally eliminate it by the end of the year.”

In its alternative budget announcement, PH released a breakdown on how it plans to make up the shortfall in revenue.

Although GST will be eliminated, PH will introduce a new consumption tax that is roughly based on the old sales and services tax that was limited to some goods and services.

This is expected to contribute RM16.5 billion to the public coffers and bring down the loss from GST elimination to RM25.50 billion from RM42 billion.

“A more nuanced fiscal calculation shows that reinjecting RM25.5 billion into the market will directly cause three positive revenue results,” Wong said.

PH expects that it will cause a boom in consumption and business activity that will increase revenue in these areas:

• An additional RM2.81 billion in corporate tax revenue.
• An additional RM400 million and RM1.06 billion in import and excise duties for all goods except cars due to a conservative 20% spike in consumption.
• An additional RM300 million in real property gains tax (RPGT) bringing it to RM1.82 billion.
• A boom in car sales will result in higher car import duties from RM130 million to RM770 million, excise duties from RM1.3 billion to RM7.82 billion and motor vehicle licenses from RM500 million to RM3.01 billion.
• Stamp duty collection will increase by RM1.2 billion.
• Better investment income of RM3.8 billion from government-linked companies and development finance institutions.

With these increases, PH expects to further reduce the loss of revenue from GST from RM25.50 billion to RM14 billion.

If it gets into federal power, PH says it can save RM20 billion in operating costs by cutting down wastage and corruption.

From its calculations, about RM160 billion that is spent in the government’s budget each year is susceptible to wastage and misappropriation, said Wong.

“Based on the auditor-general’s report every year, the amount of wastage and mismanagement totals between 10% to 15% or an average of RM20 billion,” said Wong.

“By carrying this out, we will not only be able to completely cover the revenue loss from the elimination of GST, we will in fact, record a surplus of RM6 billion.” – October 25, 2017.