OPPOSITION lawmaker Khairy Jamaluddin has urged the government to break its pledges to abolish the goods and services tax (GST) and extend the period of repayment for student loans as the policies would harm the country’s finances.

Khairy said as Prime Minister Dr Mahathir Mohamad had said the Pakatan Harapan manifesto was just a guide and not “kitab suci” (sacred text), some of the promises it contained could be broken.

The Rembau MP said the government should retain the GST but lower the rate from 6%. He also urged the government not to allow National Higher Education Fund Corporation student loan borrowers to put off repayment until they earned a monthly salary of at least RM4,000.

He said the government should relook its manifesto pledges rationally rather than make populist moves that could cause harm to the country’s finances and economy.

“I appeal to the government to do the right thing,” he said in his motion of thanks for the Yang Di-Pertuan Agong’s royal address at the Dewan Rakyat sitting this evening.

Khairy, who has been critical of the two pledges, said the zero rating of the GST had had no impact on the prices of goods.

He said even Finance Minister Lim Guan Eng had admitted the GST was a more efficient and transparent tax scheme than the sales and services tax (SST) the government would replace it with come September 1.

“PH has always championed competency, accountability and transparency. The minister also admitted that GST was a more transparent tax system that had covered the loopholes in the previous SST system.

“So why must the better system be replaced with one that is less efficient and less transparent? We will be taking a step backwards and be the only country that replaces GST with SST.”

Khairy proposed that the government lower the GST rate instead.

“The government can calculate the projected revenue it can get from SST at 6% and 10%, and fix the new GST rate to deliver the same revenue.

“May it be at 3% or 4%, as long as the government can still generate the same revenue. If the end game is RM20 billion, implement whatever GST rate that can get you that amount.”

He said if GST was perceived to be a financial burden on the people, then more goods could be exempted from the tax.

“The government says SST will only cover 38% of the consumer price index (CPI) basket of goods, compared with GST’s 60%.

“To address this, you can put more items on the GST-exempt list. This way, we don’t have to abolish GST and reintroduce SST. Businesses are already using the GST system.

“I hope the government won’t make populist moves at the expense of the economy and a better tax system.”

On PTPTN, Khairy said the concern was for Malaysian youth who needed the loans for their education.

“PTPTN needs at least RM5 billion a year for the student loans. It gets back far less from repayments - RM1.45 billion in 2015, RM3.43 billion in 2016, and RM3.98 billion last year.

“Repayments increased when the previous government started to put defaulters on the Immigration blacklist. How many will pay without the blacklist now?”

Khairy said that to continue lending to students, PTPTN, one of the government’s contingent liabilities, would be forced to take loans from financial institutions, and pay interest of 5% to 6% compared with the 1% it charged for its student loans.

He also said the government still did not have the strategies to spur economic growth and increase wages that would enable youth to get jobs with good salaries that would in turn help them pay their PTPTN loans.

“What we have is a government of excuses and cancellations. Not government of economic growth.”

Earlier, Khairy said the PH government had been using the national debt inherited from the previous administration as an excuse for its inability to deliver some of its election pledges.

“As a member of the previous administration, I have explained the national debt issue,” he said.

“We cannot allow this government to start its administration on a false premise.”

He said he was shocked at how the finance minister had used a non-international standard formula to calculate the national debt, lumping together government debt with contingent liabilities or government guarantees.

“There was no explanation at all about the contingent liabilities. They were made to appear as debts.”

Khairy said Malaysia’s national debt was 103% of the GDP (gross development product) in 1986 when Dr Mahathir was prime minister the first time.

“We should not just take the absolute figures when its comes to the national debt… we have to consider the debt-to-GDP ratio.

“Dr Mahathir said the highest debt during his first tenure was RM300 billion, 27% of the GDP. But the highest was 103% of the GDP in 1986, according to records.” – July 25, 2018.