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PUTRAJAYA, Aug 30 — Businesses had hiked prices when the Goods and Services Tax (GST) was imposed because of the dishonest people who were in charge, said Finance Minister Lim Guan Eng.
Lim said businesses were supposed to get back their tax inputs within a certain period and when they didn’t get it back they passed on what was owed to them to consumers.
“When they don’t get their refunds they counted it back into their pricing and that resulted in high end pricing.
“If the product takes four stages, instead of being at 6 per cent it ended up at 24 per cent,” he told a media briefing on the Sales and Service Tax (SST) today.
He added that the GST also had too many bureaucratic procedures and processes, all of which were too complicated to understand.
“What more when businesses had to go and get their refunds they have to fill up numerous forms,” he said, which also has additional administrative cost.
He said the SST is a straightforward system at a single level.
“That is why you collect lesser taxes because when it's simple, you get less money and when it’s complicated you get more money,” he said.
Lim said the SST collection next year will be RM23 billion less than GST.
Lim said the government expects to collect SST totalling to RM4 billion this year alone.
To overcome the shortfall, Lim said more money was expected from Petronas; at about RM5.4 billion to RM6 billion thanks to the high crude oil price which has reached US$77 per barrel.
Additionally, he said there would be revenue from Khazanah Nasional and Bank Negara, and besides those, mega projects were being reviewed to cut government spending.
Asked what would happen if crude oil price fell drastically in the future, and how the losses will be covered, Lim said the government is not fully dependant on crude oil income alone to cover the shortfall.
“Now that the crude oil price is high, we enjoy the windfall while we can. When the price drops then we will have to deal with it,” he said.
“We hope that the SST will help to lessen the impact in case the crude oil price drops in the future,” he said
When asked if more taxes will be introduced, Lim replied: “For now till the end of this year, it's only SST, if there are any other taxes, we will have to wait for the budget to be tabled.”