PETALING JAYA: Finance Minister Lim Guan Eng expects the Sales and Services Tax (SST) bill, which sets the rates at 10% for goods sales and 6% for provision of services, to be passed in August during the current Parliamentary sitting.
Speaking at the National Tax Conference 2018 today, Lim said the ministry is focused on implementing sustainable fiscal to keep public finances robust and he is confident of keeping the fiscal deficit low while maintaining a positive current balance this year.
“This confidence is demonstrated by the ability of the federal government in providing the rakyat with a three-month tax holiday beginning June 1, 2018, after more than three years of having to suffer the burdensome goods and services tax (GST),” he noted.
After the zero-rated GST came into effect in June, Lim said the government is expected to lose RM21 billion in revenue this year. However, it will be partly mitigated by an extra RM14.4 billion revenue as a result of the reintroduction of the SST, rising crude oil prices and extra dividend from government-linked companies.
Lim said in order to fill up the gap left by the GST, the Finance Ministry identified RM10 billion worth of expenditure savings, including downsizing and abolishing overlapping and nonurgent programmes.
“Certain exorbitantly priced megaprojects will have to be canceled or deferred. Indeed we have rationalized a number of projects. Last week, we managed to reduce the final cost of the LRT3 by 47% (or RM15 billion) to RM16.63 billion from RM31.65 billion, by cancelling or postponing both excess capacity and physical features.”
However, he assured that the Malaysian economic fundamentals are strong and the banking sector is well-capitalised with low non-performing loans ratio with sufficient liquidity in the capital markets.
On a separate note, Lim said the government is aware of taxpayers’ unease over the various actions taken by the Inland Revenue Board (IRB) to improve tax collection, but stressed that raids involving gun-toting security personnel have stopped.
“Now, the IRB is adhering to the rule of law by conducting desk audits instead. I hope IRB can take a different route to improve the rate of compliance. IRB must set strategies and policies that are in line with the federal government’s objective to enhance the welfare of the rakyat.”
He added that the IRB may want to have early discussions with taxpayers and tax practitioners on certain issues so that any dispute could be resolved in a timely manner.
“Not only will these early discussions prove to be time-saving, but it will also encourage greater transparency and cooperation between parties involved.”