Senate Passes SST

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Sales Tax Bill 2018 passed to replace the GST after three-hour debate.

The Sales Tax Bill 2018 was passed in Dewan Negara today to replace the Goods and Services Tax (GST) without any amendment.

Finance Minister Lim Guan Eng in his winding-up speech said that the SST, replacing GST, was to ensure the well-being of the people.

“Although it is undeniable that GST is more efficient and transparent, it collects more tax.

“The B40 are those who suffer because of GST. Previously, they did not have to pay tax, but because of GST they have to pay tax.

“We received many complaints, not only from the Peninsula, but also from Sabah and Sarawak.

He added that the government was prepared to consider views raised by senators during the debate and will expand the list of exempted items under the SST and/or include items to be taxed.

“We are prepared to listen and accept the views which were raised by senators. Whether you want it to be included or not, you can submit it in writing to the Ministry or to the Customs Department,” he said.

Lim also said that he could not give a guarantee that prices of items will go down following the implementation of SST.

“I did not say that SST will lower prices of goods. Prices of goods may increase but the effect might be lighter than GST.”

Lim said he did not dare to make prediction, like the previous deputy finance minister, who said that with GST the prices of goods will reduce.

“It is just a theory and did not happen,” he said.

He explained that the prices of goods when the SST is implemented would also be determined by other structural factors, including global oil prices.

“I want to guarantee the Dewan Negara that the SST’s main aim in replacing the Goods and Services Tax (GST) is to ensure the rakyat’s prosperity,” Lim said.

Asked by senator Khairul Azwan Harun, whether the government would announce lower corporate tax in the upcoming Budget for local companies, Lim said that it would depend on the fiscal and financial status of the government.

“At the moment, we are unable to do it but this is the direction we are headed to,” he said, adding that lower corporate tax would spur private sector participation in driving the nation’s economy.

Earlier, Lim said that the government hopes that more people will be able to enjoy the RM17 billion which will be returned to them this year, and an additional RM23 billion next year, following the abolishing of GST.

He added that prices of goods would be monitored when the SST is implemented although the increase will not be as high as the GST.

“At the same time, the federal government is studying structural problems in the domestic economy such as the power of monopoly which is burdening consumers,” he said.

The Dewan Rakyat passed the Sales Tax Bill 2018 on Aug 14 and the Service Tax Bill 2018 on Aug 15.

Opposition lawyers, comprising 32 Barisan Nasional senators and three PAS senators appointed by the previous government, did not vote against the bills.

There are 55 senators in the Dewan Negara.

The passage of the SST Bills is especially crucial in order for the government to begin collecting the tax as it zero-rated the GST on June 1 to effectively grant the country a temporary tax holiday.

The sales and services tax bills will now be sent for royal assent.

Under the proposed scheme, a 10% sales tax will be imposed on taxable goods manufactured domestically and imported goods.

Additionally, a 6% service tax will be levied on taxable services rendered through business transactions.

Some 472,000 businesses were subjected to the GST, while fewer than 100,00 will be affected by the SST.

The SST will apply to 38% of the consumer price index basket of goods and services, compared with the GST which covers 60%.

A total 5,443 goods and services are exempted from the SST, compared with only 545 items under GST, according to the Customs Department.

Restaurant operators, who make more than RM500,000 annually, will have to pay the SST.

The sales and services tax will be implemented on September 1.