We are free from GST’s yoke, says Guan Eng with passing of Sales Tax Bill

KUALA LUMPUR, Aug 8 — The Dewan Rakyat has passed the Service Tax Bill 2018 without incident after its second reading, unlike the Sales Tax Bill 2018 which was passed yesterday.

In his winding up speech, Finance Minister Lim Guan Eng said the public and even state and local governments are now free from the burden of the Goods and Services Tax (GST).

“State governments and local governments too are freed from having to pay GST with the implementation of the SST. Now, state and local governments no longer need to pay a six per cent tax on infrastructure and development projects including roadworks and drainage works.

“For instance when the Penang state government has a project worth RM2 billion, we had to pay an extra six per cent — RM120 million. This is a burden on the state government.

“Without GST and the introduction of SST — state governments, local governments and even the federal government can save up to six per cent,” said Lim.

He then added that there were state governments who had to put their projects on hold because it could not afford to pay the six per cent tax.

However, former minister and Tanjong Karang MP Tan Sri Noh Omar (Umno) then stood up and challenged Lim on his statement saying that local governments were exempted from GST.

Lim rebutted Noh, saying the latter lacked the experience of administering a state government, pointing out that there was a minor exemption at the tail end of the unpopular tax’s life.

However, he reiterated that infrastructure projects which benefit the public were not exempted.

Touching on a question on “black economy” or tax evasion posed by Pendang MP Awang Solahudin (PAS), Lim said the government plans on countering this problem utilising computerisation and technology in today’s digital age.

“Black economy, or dark economy is something we wish to overcome through computerisation — with digital economy we are heading towards transparency. The challenge faced by the Customs Department before this was that everything was done manually.

“We had to use physical ledgers but with computerisation things are different, especially since we are heading towards block chain technology,” he explained.

He also refuted Pontian MP Datuk Ahmad Maslan’s (Umno) claim that those purchasing pre-paid phone cards will have to pay the six per cent service tax, saying it is exempted.