Guan Eng: PAC report confirms unlawful treatment of GST funds

KUALA LUMPUR, July 16 — Finance Minister Lim Guan Eng insisted today that the Public Accounts Committee investigation triggered by his claim that Barisan Nasional (BN) “robbed” the country of RM19.4 billion confirmed the illegal use of tax revenue.

Lim said the now-repealed Goods and Services Tax (GST) Act had clearly mandated that collections be entered into a trust fund to allow input tax refund applications to be processed within 14 days.

“However, this was not done in accordance with the GST Act and instead, the GST collections were deposited directly into Consolidated Revenue Account.

“The attorney general has stated that this practice is against the fundamental trust law principles and trust accounting requirements, and is not in line with Section 54(2) and Section 54(5) of the GST Act 2014,” Lim said in a statement.

He said the BN government subsequently used GST collection booked as revenue in the Consolidated Account for expenses rather than input tax refunds, resulting in a shortfall and delayed refunds for GST input tax.

Lim further noted the PAC’s conclusion that the Najib administration only transferred 35 per cent of total GST collections back to the trust account when it should have set aside 42 per cent.

The minister was also adamant that this unlawful treatment of GST collections resulted in the RM19.4 billion shortfall, over which he made his “robbery” remark in Parliament last year.

He then held up the Customs Department’s confirmation last year that it owed RM19.4 billion in GST refunds due to insufficient funds as further evidence to support his position.

Lim then added that his ministry will adopt the PAC’s recommendations for the government to comply with existing laws in its financial administration and for officials to highlight regulatory departures without fear or favour.

However, the minister did not address the PAC’s conclusion that there was no theft or robbery involving GST revenue as he alleged.

The PAC tabled its investigation report to Parliament yesterday after investigating Lim’s allegation for 11 months since August last year.

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