PUTRAJAYA: Before the government mulls over the reinstatement of the Goods and Services Tax (GST), there must be solid proof that the people are in favour of such a move.
But Finance Minister Lim Guan Eng said that as of now, the government stands firm on the mandate given by the people in the 14th General Election (GE14) to abolish the Barisan Nasional-imposed 6 per cent GST – which Pakatan Harapan (PH) has delivered on.
"In the last GE, it was clear that the people had rejected the six per cent GST. Thus, if the people want it back, we must get the people’s mandate, if they want the six per cent under BN or no GST under PH.
"Also, after we abolished the GST, we managed to contain inflation at the rate of 1.5 per cent last month. Some other months, (there was even negative inflation). Abolishing the GST has had an impact and... reined in inflation and the cost of living.
"Should we allow the return of the six per cent GST, we will see inflation go up. If the people want it (GST) back, as Tun (Dr Mahathir Mohamad) said, then we need a clear mandate from the people," he said after the ministry's monthly gathering.
The Malaysian Institute of Economic Research (MIER) had called for the government to re-introduce the GST in the 2020 Budget, but at a lower rate of three per cent.
Its chairman, Tan Sri Kamal Salih, is reported to have described the GST as a tax regime that was fair to all walks of life, adding that the system had kept the government afloat when the crude oil price declined to below US$36 per barrel in 2015.
Kamal added that he was against the idea of abolishing the GST and replacing it with the Sales and Service Tax (SST) when the Pakatan Harapan government took over last year.
He explained that no matter how one expands the SST to different sectors, or however the enforcement is done, it would still not be enough to compensate for whatever (income) that had been produced by the GST.
On the mechanism to collect input from the people regarding the GST, Lim said it has to be referred to the PH Presidential Council
"I am only the Finance Minister. I am talking about setting economic policies and implementing these policies. On that one (the mechanism), it has to be decided by the PH Presidential Council. It is not up to me alone. Until that is decided, we have to respect the people's mandate to abolish the GST.
"The GE was only last year, and the people made it very clear in rejecting the GST. Unless you can give me incontrovertible evidence (to the contrary). Otherwise, you have to respect the mandate of the people in the last GE."
On how the government manages the shortfall in revenue following the abolition of the GST, the minister said the government is still able to juggle its finances.
Lim also said the government managed to shave off its RM1 trillion debt.
"It is a painful process to reduce the debt, and it cannot be done overnight. At least we have put a stop to (the debt) going up, although we have to continue borrowing to fund our development projects.
"Our books are now truthful. What you see is what you get," he added.
On his take on whether the SST is the best tax regime, Lim replied: "What is more important is that we have delivered on our promises in accordance with the PH election manifesto. I am not here to give you a lecture on economics and taxation. If I do that, I think this will be a very long session.
"As I said, we have delivered on our promise and the benefits have shown we have contained inflation. Also, the cost of living is not as pressing as before. Sometimes, our measures need time to kick in."
Earlier in his speech, Lim said that Malaysia will take pre-emptive measures to cushion the drop of global trade growth from 2.6 per cent to 1.2 per cent.
The World Trade Organisation was reported as saying that it expects trade volume to grow by just 1.2 per cent in 2019, down from the 2.6 per cent it predicted in April.
The world body also cut its global economic growth forecast from 2.6 per cent to 2.3 per cent.