KUALA LUMPUR, Jan 1 — Putrajaya should postpone implementing the Goods and Services Tax (GST) scheduled for April as it could lead to inflation just after the disastrous floods that affected quarter of a million people, DAP said today.

DAP secretary-general Lim Guan Eng also urged the federal government to declare a state of emergency to expedite the recovery process after one of the worst floods the country has experienced in decades. Almost 250,000 people evacuated from their homes in the east coast at one point last month.

“For a high water mark of 250,000 flood victims, the largest in Malaysian history evacuated from their homes, and financial losses of billions of ringgit certainly necessitate a state of emergency over the national floods disaster to expedite rescue, recovery and restoration works of damaged homes and infrastructure,” Lim said in a statement.

“In the face of such natural disaster, the BN federal government should also avoid an economic disaster for the 14.1 million labour force (as of October 2014) by deferring the imposition of the 6 per cent GST on 1 April 2015, which will result (in) inflation and worsen the average standards of living,” added Lim, who is also Penang chief minister.

Lim cited statistics from government agency Pemandu indicating that 80 per cent of households in Malaysia earns less than RM4,000 a month.

Prime Minister Datuk Seri Najib Razak, however, was quoted saying yesterday by local New Straits Times as saying that the government may use the extra revenue generated from the GST, a consumption tax, to help flood victims.

In his last Budget speech, Najib, also Malaysia’ finance minister, said the GST is expected to rake in RM23.2 billion, although the final figure will be much smaller due to goods exempt from the consumption tax and as the government forgoes sales taxes established previously at RM3.8 billion and RM13.8 billion respectively.

The General Insurance Association of Malaysia (Piam) has confirmed that insurance firms will not be absolved of liability in paying out compensation for flood claims filed if a state of emergency is declared, contradicting Najib’s reported remarks on the matter.

The prime minister was quoted by national newswire Bernama as saying recently that insurance companies would be absolved from paying compensation if the government declared an emergency over the disaster.