Go back to the people, says Guan Eng on calls to revert to GST

(FMT) – Finance Minister Lim Guan Eng today said any move to revert to the goods and services tax (GST) must get a clear mandate from the people, saying voters had rejected the tax in the general election last year.

“If people want it, we need clear mandate from the rakyat,” he told reporters after a gathering with his ministry staff.

Lim said Putrajaya was able to control inflation with the zero-rating of GST in June last year, adding that it was also part of the Pakatan Harapan manifesto.

“We enjoy one of the lowest inflation rates in the world,” he said, adding that it measured at 1.5% last month, compared to 3.3% to 4% under the 6% GST.

“This is very clear. Without GST we have managed to contain inflation, in fact this whole year we expect it not to exceed 1.5% or maybe even lesser.”

GST, introduced in April 2015 at 6%, was replaced with SST on Sept 1, 2018.

On Wednesday, the Malaysian Institute of Economic Research (MIER) proposed that Putrajaya re-introduce the tax in the coming budget with a lower rate of 3%.

It said the tax regime had kept the government afloat when crude oil prices declined to below US$36 per barrel in 2015.

Yesterday, Prime Minister Dr Mahathir Mohamad said the government could bring back GST “if that is what the people want”.

Lim said Mahathir did not raise the topic when they met yesterday.

“I think he was just replying to the press, saying that if people wanted it, then we can consider,” he said.

On how to gauge public sentiments on GST, Lim said the PH leadership can decide on a mechanism.

He said the RM44 billion revenue from GST, as cited by the previous administration, was the gross amount before refunds.

“The net figure is much lower, around RM33 billion to RM34 billion,” he said.

He said dividends paid by Petronas to the government were used to pay a backlog of GST refunds.