Former prime minister Datuk Seri Ismail Sabri Yaakob said that the goods and services tax (GST) should be reintroduced in order to increase national revenue, The Star reported. This echoes former transport minister Datuk Seri Wee Ka Siong who in September also called for GST to be reintroduced.
(We have previously written on the impact of GST on the automotive industry and on car prices, and you can also read more here on the mechanics of both taxation systems.)
The reintroduction of GST would be a better move to increasing revenue compared to retaining the current sales and service tax (SST), saying that the government’s plan to raise SST from 6% to 8% was “not the right move” as it would not generate significant revenue while burdening consumers.
“Although the SST increase does not involve the food sector, it will have a domino effect on other aspects that will influence an increase in the price of goods, as traders will not absorb the costs. It is time for the government to look at reimplementing GST,” Ismail Sabri said in debating Budget 2024.
The former prime minister said that the country lost approximately RM20 billion to RM30 billion a year due to the “black economy”, and said that increasing SST by 2% will provide just RM3 billion at best based on government estimates, he said.
From the perspective of the automotive industry, the reintroduction of GST has been suggested to reduce car prices by between one to six per cent if it is to replace SST, which is currently 10%. The 2015 implementation of GST was proven to reduce car prices by as much as 6%, the Malaysian Automotive Association (MAA) said.
As a recap, GST is a value-added tax where tax is paid at every stage of the business transaction, compared to SST which is a one-time tax paid by the manufacturer or importer. Despite that, the total amount of tax paid under GST is lower due to its input tax claim mechanism. That said, there is more at play when it comes to adjustments in car prices, as we have explored two years ago.
The post GST better for national revenue than SST: Ismail Sabri appeared first on Paul Tan's Automotive News.
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