Don’t abolish GST and don’t reintroduce SST

By TK Chua

Pakatan Harapan (PH) reportedly wants to abolish the goods and services tax (GST) and reintroduce the sales and services tax (SST) if it wins the 14th general election (GE14).

I agree that we could have avoided GST if the government had been prudent in its financial management. Malaysia is, after all, rich in resources. Taxes, royalties, fees, and collections from other sources would have provided sufficient funds for us to administer and develop the country.

Besides, the privatisation of energy, telecommunication, roads, and other services has also lightened the government’s financial burden. Many of the expenditure programmes are actually quite unnecessary. The government essentially spends to please the cronies and contractors. Sometimes it is better for the government to do less and tax less.

However, as much as we dislike GST, the tax system has been with us for about three years. I urge caution in abolishing it and bringing back the SST. It is not going to be as simple and straightforward as we think.

I am concerned that removing GST will not bring prices down by 6% as we envisage. Reintroducing the SST will likely cause another round of havoc in the market place. Prices will probably escalate beyond the SST rates just like when we first introduced the GST.

So here is my suggestion: Don’t abolish the GST completely. Bring it down to, say, 3% but don’t reintroduce the SST. This is a much better way to regulate prices and control unwarranted profiteering among traders.

GST is bad because poor implementation has caused prices to escalate beyond the 6% GST rate. To maintain stability, just keep the GST but with a reduced rate, and for goodness’ sake don’t reintroduce the SST. It is going to be ugly if SST is reintroduced.

I understand abolishing GST is already a part of PH’s manifesto. Don’t worry; it can rethink this manifesto if it wins the election.

The government must rein in unnecessary and extravagant expenditures, period. No amount of taxes will be able to fill the fiscal gap unless financial prudence is adhered to.

TK Chua is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.