MP: Country’s operating expenditure would have experienced deficit without GST

KUALA LUMPUR, Aug 8 — Pontian MP Datuk Seri Ahmad Maslan said that without the Goods and Services Tax (GST) the country would have experienced a deficit in its operating expenditure.

The former International Trade and Industry Deputy Minister said Malaysia has never experienced an operating expenditure deficit since independence in 1957.

“Without the GST we would be in debt to pay off salaries. As it stands we only have development expenditure deficit. Removing the GST would then result in what is called a double deficit,” he said during the debate on the Sales and Services Tax (SST) at the Dewan Rakyat today.

If the country were to fall into a double deficit, Ahmad said credit rating agencies around the world would rate Malaysia in the negative, leading to the economy’s detriment.

He also insisted the GST was originally implemented to offset the decline in oil revenues which the government depended upon, and not to supposedly pay for 1MDB’s debts.

“In 2014 oil revenues stood at RM26.9 billion, which decreased to RM11.5 billion in 2015. That same year GST collected RM27 billion.

“In 2016 oil revenues declined to RM8.4 billion, whereas GST collected RM41.2 billion. Last year oil revenues were RM10.9 billion and GST stood at RM44 billion,” Ahmad said.

He offered several reasons as to why the GST was superior to the SST, using a document which he claimed came from the Customs Department.

“The GST is more effective in countering the ‘black’ economy while the SST will likely lead to its increase. Likewise the GST prevents the impact of the tax rate from cascading, whereas SST offers no such protection,

“If the SST were to be implemented then the method for percentage of profit margins (‘kaedah margin keuntungan peratusan’) would cause a compounding price effect (‘kesan harga berganda’),” Ahmad said.

Adding to this he said the issue of transfer pricing within the SST will lead to considerable leakages and a decline in the government’s revenue collection.

“Unlike the GST, the SST will also have an effect on hidden export taxes, which then causes our export levels to shrink,” Ahmad said in conclusion.

He refused to provide any detailed explanations by saying his allocated speaking duration had run out, despite calls from Ipoh Timur MP Wong Kah Woh and Damansara MP Tony Pua to do so.