PUTRAJAYA: Malaysia will implement the sales and services tax (SST) in September to replace the goods and services tax (GST), announced Prime Minister Mahathir Mohamad on Wednesday (May 30).
The 6 per cent GST will be zero-rated from Jun 1, effectively removing it for consumers, but abolishing it would require the approval of Parliament.
When asked if the SST would be set at its previous rate of 10 per cent, Dr Mahathir said: "We will study it."
He added that the finance ministry will provide more details on the SST on Thursday.
On a TV3 bulletin aired on Wednesday night, Chairman of the Council of Eminent Persons Daim Zainuddin said that the report on the SST will be submitted to the government in two weeks.
The SST system to be introduced will be a "somewhat updated version", with the ultimate goal of lowering the price of goods and services for the people.
"There will be no immediate need to introduce any new taxes nor increase the personal income tax or corporate tax rates at this juncture," said Daim, adding that economics was a very complex subject and could not be looked at from a single perspective.
In his overview, the former finance minister also said that the tax would be capable of raking in sufficient revenue to make up for the loss of proceeds from the abolition of the GST.
"The Royal Malaysian Customs Department has already given me a preliminary report. Revenue may be less than RM5 billion, but oil prices are increasing steadily," he said.
“The (2018) Budget was worked out on the premise that oil prices would hover around US$52 per barrel but now it is fetching about US$70 per barrel.
“Last week, it was US$80 per barrel. For every US$1 movement, we will earn RM300 million to cover our shortfall,” Daim added.
[So US$1 increase = RM300m. As US$1 = RM4 (approx), so MY exports approx 75 million barrels of oil.]
Commenting on doubts as to whether goods and services would be cheaper after the re-introduction of the SST, the diminutive tycoon said the value of the ringgit would impact the price of goods, the bulk of which are imported.
[Really? What has his physical stature got to do with anything? Even if he were Tyrion Lannister...]
This situation can be overcome with the people placing more trust in the government, he added.
On Wednesday, Dr Mahathir also announced a 50 per cent discount in the toll rates on all highways on the two days before Hari Raya Aidilfitri next month.
Speaking to reporters after the weekly Cabinet meeting, he also said that some FIFA World Cup 2018 football matches will be broadcast live by RTM for free. A total of 27 matches will be shown live while 14 more will be a delayed broadcast, said Communications and Multimedia Minister Gobind Singh Deo.