Dr M: Tax regime flip-flop will hurt the economy

Dr M: Tax regime flip-flop will hurt the economy

KUALA LUMPUR: The government has no plans to reintroduce the controversial Goods and Services Tax (GST) as frequent changes to the tax system will harm the economy.

Speaking at the Dewan Rakyat today, Prime Minister Tun Dr Mahathir Mohamad said that flip-flopping on the taxation regime would also affect investors’ confidence and damage the nation’s image.

“Many types of taxes have been introduced. People complained about GST as they had to pay tax twice. That’s was why we reinstituted the Sales and Services Tax (SST).

“The SST is proceeding, we only need to improve it, and there is no need to revert to a tax regime that was rejected by the people,” Mahathir said during the Minister’s Question Time session.

He was replying to Ma’mun Sulaiman (PH-Kalabakan) who wanted to know whether the government was ready to reintroduce the GST if the public wants it back.

Ma’mun said there are differing opinions among the people, with some agreeing to the proposal and others rejecting it.

Mahathir said that GST cannot be reintroduced as it had burdened the public and taxpayers, especially with the delays in getting refunds of input tax credit, which is a cost to businesses.

In reply to a supplementary question from Noor Amin Ahmad (PH-Kangar) on the ability of the SST to control payment defaults by businesses as with the GST regime, Mahathir expressed confidence the problem does not arise in SST.

“Actually, there is no tax evasion as the SST has been around for some time and faces no problem. That is why we rejected GST and reintroduced SST.

“If managed well, SST can be better than the GST,” he said.

To a question from Datuk Seri Dr Ismail Mohamed Said (BN-Kuala Kurau) on whether the government’s economic policies and cost-cutting measures could cover the SST shortfall of over RM20 billion compared to the tax revenue during the implementation of the GST, Mahathir said the shortfall is not due to the weakness of the SST system.

He explained that when a tax system is introduced, there would at first be a reduction due to the changes made by officers and taxpayers.

“But I am confident that in the coming years, the SST (tax collection) will exceed the GST collection,” he said.