Be prudent in spending, govt told

NST

KUALA LUMPUR: The government needs to be careful in its operating expenditure until this December, following the abolishment of the Goods and Services Tax (GST).

People should also be encourage, especially traders, to pay their taxes when the Sales and Service Tax (SST) kicks in from Sept 1 onwards.

Association of Malaysian Tax Accountants (Mata) president Datuk Abd Aziz Abu Bakar said repealing GST had resulted in the government experiencing a RM13 billion revenue deficit.

He said based on the 2018 Economic Report, the government’s total revenue forecast this year was RM240 billion, with direct taxation contributing RM128 billion, indirect taxation contributing RM64 billion and the remainder coming from non-tax revenue, as well as borrowings and the use of government assets.

He said from the RM64 billion, RM44 billion was to be collected through GST, which, from January to May, saw RM18 billion in revenue.

“However, when the government zero rated the GST, the government lost RM18 billion in revenue.”

The government is expected to collect RM7 billion from SST from Sept 1 until the end of the year.

This means the government would have collected RM25 billion from GST and SST this year.

“From this, the government would face a revenue deficit of RM18 billion.

“The operating expenditure of RM234 billion includes emoluments of RM79 billion, retirement (RM24 billion), debt service (RM31 billion), supply and services (RM34 billion) and social assistance (RM27 billion),” Aziz told the New Straits Times Press.

The Dewan Rakyat had, this month, passed the Sales Tax Bill, Service Tax Bill as well as repealed the Goods and Services Tax Act.

GST was implemented by Barisan Nasional on April 1, 2015, at a rate of six per cent.

Aziz said the deficit rate in the 2018 Financial Report was forecast at 2.8 per cent.

However, he said, after a three-month tax holiday, as well as SST being implemented, the deficit rate was expected to touch four per cent.

“If the government’s account sees negative results, we may have to borrow and this does not look good for the government.

“As such, the government needs to be careful with its operating expenditure.

“It has to spend prudently. The government should not reduce salaries and must continue to pay its debts.”

He said the implementation of SST also raised the spectre of people not paying their taxes and could lead to the formation of a “black economy” atmosphere.

He said the government’s advice to the Inland Revenue Board to remove travel bans imposed on tax defaulters posed a risk to its tax collection.

“The government should encourage people to be disciplined in paying their taxes.”

Touching on the implementation of SST, which was meant to reduce the cost of living, he said the impact would not be seen immediately.

Instead, he said, it was expected to be seen two months after its implementation because prices of goods were not likely to be reduced drastically.

“We cannot expect to see a drastic drop in prices of goods on Sept 1.

“We have to look at it in a month or two.

“We have to remember that the government’s move to implement SST is to reduce the cost of living.

“When prices of goods are reduced, there will also be a drop in the cost of living.” © New Straits Times Press (M) Bhd