SST covers only 38% of CPI basket, Guan Eng says

KUALA LUMPUR (Jul 19): The upcoming sales and services tax (SST) will only be imposed on 38% of the Consumer Price Index (CPI) basket of goods, as compared to 60% by the goods and services tax (GST).

At a press conference in Parliament today, Finance Minister Lim Guan Eng (pictured) said facts and figures do not support claims by former Prime Minister Datuk Seri Najib Razak that Malaysians will pay more under the SST system.

Lim said Najib so far has not responded on how the SST could burden the people more than the GST when the expected collection from the SST is estimated at RM21 billion for a full year, while the GST had expected to collect RM44 billion in 2018.

Lim said SST is a single-stage tax imposed on manufacturers and not on end customers while GST is a multi-stage tax where tax is payable by all parties in the supply chain.

"Technically, each supplier can claim back GST as an input tax from the government. Nonetheless, this still causes a huge problem with operating cashflow for many businesses as the government has been notoriously slow in refunding GST claims," he said.

"The delay in refund has caused many businesses to factor in the delay and escalate their prices. Although GST is more transparent, but it sided the government," he added.

Lim said he will expose at a later date the real cause of the failure of the previous government to repay refunds to claimants promptly.

"At the same time, Pakatan Harapan hopes the extra RM23 billion returned to the people will stimulate private consumer demand, raise business optimism which in turn would generate economic growth," he said.

Lim said there is 'no doubt' that the impact from the SST will be less than GST by almost half. — theedgemarkets.com

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