MCA: Reintroducing GST a wiser option than imposing LVG tax

REINSTATING the Goods and Services Tax (GST) would offer a more prudent and effective solution as compared to the low-value goods (LVG) sales tax which is unlikely to generate significant revenue for the country and places an undue burden on consumers.

MCA Central Committee Member Datuk Kang Meng Fuat said the LVG sales tax, estimated to generate only RM200 mil annually, is a “drop in the bucket” compared to the government’s needs.

“The meagre gain will be overshadowed by the steep price of another spike in cost of living and financial strain. This untenable situation will cause economic hardship and demands alternative solutions that address fiscal challenges without burdening the most vulnerable,” Kang said in a statement on Friday (Dec 22).

“Despite mounting calls from MCA and many business calls advocating for the GST – a system proven to provide better transparency, fairness and sustainable revenue generation – the government clings to its unilateral decision that benefits no one.”

According to Kang, the numbers paint a stark picture: Since the introduction of the GST in 2015, the government collected revenues of RM379 bil in 2015, RM593 bil in 2016, and RM670 bil in 2017.

After implementing GST in April 2015, the government collected revenues of RM27.0 bil in 2015, RM41.2 billion in 2016, and RM44.0 bil in 2017. Following its repeal and the switch to the Sales and Service Tax (SST) in 2018, government revenue nosedived to RM26.7 billion in 2020.

“It is understandable that the government intends to increase its revenue via various sources of income. However, the basis to not resume the GST is feeble,” Kang remarked.

“To increase revenue, the government announced an increase in the SST rate and expanded the scope of taxation. It also introduced a capital gains tax, high value goods tax, and LVG sales tax for goods purchased online from abroad.

“It is difficult to comprehend what the government’s tax policy and direction are.”

Kang said despite criticism such as delays in tax refunds in the early stages of the implementation of the GST, the country can overcome these problems as long as it improves guided by experience and from more than 170 countries around the world that have adopted similar consumption tax systems.

“Unfortunately, the government chooses to tax a little from the east and a little from the west, and introduces various tax systems to solve financial problems,” he pointed out.

“Not only are these methods inefficient, but they also add on to the government’s administrative and paperwork load, resulting in a lose-lose situation for both taxpayers and the government.

“We urge the government to recognise the facts, and not to bring politics into national financial management. Managing the country’s finances in a more objective and scientific manner is a more financially viable and prudent way to go.” – Dec 22, 2023


Main pic credit: AP

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