Ong Kian Ming: How Government Will Make Up for GST Shortfall

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Look for new sources of revenue and reduce expenditure.

  • Increased dividends from Petronas, Bank Negara, Khazanah
  • Expand base of those income taxable
  • Relook some infrastructure projects

Bangi MP Ong Kian Ming today said the Pakatan Harapan (PH) government would make up for the shortfall in revenue from the zero-rating of the goods and services tax (GST) by looking for new sources of revenue and reducing expenditure.

Ong, who is a special officer to the finance minister, said zero-rating the GST would result in a shortfall of RM21 billion a year.

He added that the government would see additional expenditure from its efforts to stabilise petrol prices.

However, he said the government would seek to boost revenue from higher corporate taxes, most likely from Petronas, due to the increase in global oil prices which are presently at US$70 per barrel compared to the US$52 per barrel projection for the 2018 budget.

In an interview with radio station BFM, Ong said the government may collect RM8 billion to RM9 billion in increased special dividends from Petronas.


“Other sources of revenue may be from increases in dividends paid for by Bank Negara and Khazanah Nasional.”

He added that infrastructure projects where a letter of offer had not been given, like the Klang Valley Double Tracking project to upgrade the KTM, may be reviewed.

“This project was awarded through direct negotiation and not open tender. It costs RM2 billion to RM3 billion. This is an example of projects that will be reviewed, and either postponed or cancelled.”

On the sales and services tax (SST) which is set to replace the GST, Ong said it would likely be introduced in September.

He said the Customs Department was ready to implement the SST, although it might be different from how it was before its abolishment in 2015.

“We will make it more streamlined and we may reduce the exemptions so there are less grey areas where people lobby the finance ministry for exemptions,” he said, adding that this would help increase revenue and narrow the shortfall between the GST and SST.

Ong also said the SST base may be expanded, and that while the SST rate had yet to be finalised, the government didn’t want to burden the people.

“Even though the SST rate may be 10% compared to the GST’s 6%, the SST is not charged on all goods, only at the manufacturing stage. It’s not a consumption tax,” he said, adding that the tax impact on consumers was likely to be minimal.

At the end of the day, he said, the revenue collected from the SST would be about half of what was collected from the people, and the difference in revenue would go back to them.

Ong also said it was unlikely that any new taxes would be introduced this year. He said the government would expand the base of those who were income taxable, adding that its priority was to increase incomes so people could be taxed rather than widening the net.

He also hit out at former prime minister Najib Razak, claiming the Pekan MP had not been transparent with the people and Parliament on Malaysia’s debt situation.

“If Barisan Nasional won, we would face a fiscal crunch soon, but now we can relook some infrastructure projects,” he said, noting that the likes of the MRT3, East Coast Rail Link and High Speed Rail were major ticket expenditures which were to be financed with special purpose vehicles.

“We have to look at the viability of these projects. If they’re not viable, we either have to renegotiate them or cancel them.” – FMT