20 July 2018

The SST tax exemption list can be applicable in the GST system; exempt imported automobiles from exorbitant import duty and domestic tax

On 19 July 2018, Finance Minister Lim Guan Eng came out with a list of SST-exempted items to demonstrate that the reintroduction of SST would not burden the rakyat unnecessary. We, the MCA Youth Legal Bureau, would like to request Guan Eng to further clarify if the exemption list can be implemented in the current GST tax system.

As a matter of fact, when the former BN government first introduced GST in 2015 to the public, it had also unveiled a similar tax exemption list. Assuming that the new government is committed in lifting the rakyat’s fiscal burden, it can maintain the current tax system while expanding the scope on the tax-exemption list, or by simply lowering the tax rate.

If the current government chooses to walk the path of reversal and swim against the global trend by replacing GST with SST, many merchants and foreign investors will be inconvenienced with the need to replace their billing system. This shall subsequently increase their operation cost, and thus, inevitably lead to another round of market inflation.

More importantly, SST is dealt with between the Customs and manufacturers behind closed doors, lacking the transparency of GST consumers take for granted nowadays. We are concerned that our nation will once again be plagued by rampant tax evasions facilitated by SST. Lim Guan Eng needs to ensure that the Cabinet has devised enough anti-corruption arrangements to counteract corrupted officials and to implement their tax system smoothly.

Rather than going through the hassle of reshaping the entire tax system without confidence that the resulting inflation can suppressed, Lim Guan Eng ought to simply lower domestic tax rates and import duties for imported automobiles; or better yet exempt them from taxation too, to help reduce household debt in a most substantial manner.  After all, imported cars currently cost more than double its original price tag in Malaysia.

Prime Minister Tun Dr Mahathir Mohammad has constantly attributed the failure of his pet national car project to the un-patriotism of Malaysians. I find this train of thought to be flawed and unacceptable. Instead, he ought to have directed the national car company to conduct a thorough internal assessment while studying the success of the South Korean auto industry. The reevaluation of whether the quality of its manufactured car can actually compete with imported brands would have been pivotal.

It is regrettable that the government seems headstrong in realising Dr Mahathir’s second national car plan. In the end, the biggest loser is the rakyat who had to stomach the exorbitant price of imported automobiles.

Ng Kian Nam

MCA Youth Legal Bureau Chief

-MCA online-