KUALA LUMPUR, Oct 24 — The government lost out on revenue worth over RM5 billion by exempting Malaysian consumers from paying Goods and Services Tax (GST) on certain items,

Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said today.

He said this means Malaysians are effectively paying a GST rate of just over three per cent due to the government’s numerous exemptions for consumer items from the tax regime.


“We are the first country who implemented GST with hundreds of exemption, there itself we are losing over RM5 billion.

“So effectively it’s not even six per cent, the GST — it’s less than six per cent, because we are giving a lot of exemptions and we calculated its three-point something per cent, the effective rate,” he said at a post-Budget 2017 dialogue session.

Putrajaya collected RM27 million in revenue in the form of GST in 2015 and is expected to collect RM38.5 million and RM40 million in 2016 and 2017.

Mohd Irwan was sharing on how both the introduction of the GST last April and the government’s slashing of subsidies helped it to weather through a “tough time” during a fall in oil prices — used to determine projected government revenue for Budget 2016.

Mohd Irwan said that the government is still currently footing part of the bill for Malaysians through various subsidies, showing data where RM4.2 billion is allocated for petrol, cooking gas and electricity bills; RM885 million for toll and transport; RM510 million for rubber smallholders during the rainy season and RM250 million for fishermen.

“In the long run, we really need to look at cooking gas. It’s not targeted subsidy. It’s not targeted, even the rich guy, even the mamak stall still they are using the subsidised cooking gas,” he said.

Putrajaya has been slashing its allocation for subsidies over the past few years and had abolished fuel subsidies in December 2014.

According to the Malaysia Economic Report 2016-2017, the federal government’s allocation for subsidies and social assistance was RM43.3 billion in 2013, RM39.7 billion in 2014, RM27.3 billion in 2015, an estimated RM24.6 billion and RM22.4 billion for 2016 and 2017 respectively.

Mohd Irwan was speaking today at the Malaysian Economic Association’s (MEA) event titled “Budgetary Priorities in a Challenging Economic Environment”.

the source:www.themalaymailonline.com