Finance Minister Lim Guan Eng says the ministry is looking at several options to meet the shortfall in revenue.
Finance Minister Lim Guan Eng (second from left) with deputy treasurer-general Siti Zauyah Mohd Desa at the press conference.
PUTRAJAYA: The sales and services tax (SST) will be rated at 10%, its previous rate, before the goods and services tax (GST) was implemented in 2015.
Finance Minister Lim Guan Eng said efforts were being made to implement SST as quickly as possible.
GST will be zero-rated from June 1.
When asked how the ministry planned to recover revenue lost from the removal of GST, Lim said the ministry was looking at several options.
First, the ministry needed to have a full and accurate view of the nation’s actual financial position, Lim told a press conference at the finance ministry.
Malaysia obtained RM44 billion in revenue from GST last year. Pakatan Harapan scrapped the GST once it took power after the May 9 general election, in keeping with promises made in its election manifesto.
It has maintained that any shortfall in income from SST will be met by plugging leakages in government expenditure and reviewing mega projects.
In 2014, the year before GST was implemented, the country earned RM17 billion from SST.
A rating agency, Moody’s Investors Service, today said the move to remove GST will be “credit negative”, unless the new government takes steps to offset the loss in revenue.
“Assuming a stable share relative to GDP, and taking into account seasonal patterns, we estimate the revenue loss from the voiding of the GST at around 1.9% of GDP this year.
“We also estimate that if the SST, which yielded revenue of around 1.6% of GDP before the GST replaced it, takes effect in July, the revenue loss would narrow to 1.0% of GDP for this year,” said Moody’s.
While these losses can be mitigated by the higher oil price, this was not a permanent substitute for the GST, and was not a reliable offset to lost revenue given the volatility of prices.
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Sumber SST will definitely be implemented this year, says finance ministry