KUALA LUMPUR: Fear that Pakatan Harapan's move to abolish the goods and services tax (GST) and replace it with the sales and service tax (SST) would get a problem in Dewan Negara after the first of the six related invoices was adopted by a majority voting vote on Monday (August 20).
The law on turnover tax was adopted after approximately three hours of debate.
Minister of Finance Lim Guan Eng in his closing speech said the government was prepared to consider positions of senators during the debate and the list of exempted items under the SST will extend and / or include tax items.
"We are willing to listen to and accept the views of senators, whether you want to include it or not, you can submit it in writing to the ministry or to customs," he said.
Lim responded to a question from Senator Bathmavathi Krishnan, who requested that associations for persons with special disabilities be allowed to import equipment and oxygen tanks free of SST.
Senator Datuk Ong Chong Swen wanted to know why certain luxury items such as jewelery, Norwegian lobster and pâté were excluded from the SST.
Lim also said that he could not guarantee that the prices of items will drop after the implementation of SST.
"I have never said that the SST will lower the prices of goods, but that the effect would be less than GST. I do not want to be a former finance minister who has predicted that prices will fall if GST is implemented," Lim
He explained that the prices of goods when the SST is implemented will also be determined by other structural factors, including global oil prices.
Asked by Senator Khairul Azwan Harun, the Lim said the government would announce lower corporation tax in the upcoming budget for local businesses, depending on the fiscal and financial status of the government.
"At the moment we are not able to do it, but this is the direction we are going," he said, adding that lower corporation tax would stimulate private sector participation in stimulating the national economy.
Earlier, Lim said the government hopes that more people will enjoy the RM17bil that will be returned to them this year, and next year an extra RM23bil, following the abolition of GST.
He added that the prices of goods would be tracked when the SST is implemented, although the increase will not be as high as the GST.
"At the same time, the federal government is examining structural problems in the domestic economy, such as the power of the monopoly that taxes consumers," he said.
On 14 August the Dewan Rakyat passed the Tax Law for turnover tax 2018 and the service tax 2018 on 15 August.
There are 32 Barisan Nasional and three PAS senators, out of 55 in Dewan Negara.