Netizens support Malaysia replacing the GST with SST, voicing benefit of the latter

Malaysia will implement the sales and services tax (SST) in September 2018 to replace the goods and services tax (GST).

Earlier, Prime Minister Tun Dr Mahathir Mohamad told reporters after the country’s Cabinet meeting on Wednesday (30 May) that the Finance Ministry will provide more details on the SST on Thursday.

Former Prime Minister Datuk Seri Najib Tun Razak’s administration, had replaced the SST with the GST at 6% on 1 April 1, 2015.

The main differences between the two consumption taxes are:

  1. SST has a much narrower number of goods and services that are taxed, which means lower revenues.
  2. SST is only levied at the point of final consumption. GST, like VAT, is charged, declared and recovered in B2B transactions throughout the supply chain; this helps reduced tax fraud.

While the GST has been zero-rated since 1 June, effectively removing it for consumers, but abolishing it would require the approval of Parliament.

“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,” Chairman of the Council of Eminent Persons Daim Zainuddin said on TV3 Wednesday night.

Dr Mahathir also announced on Wednesday that a 50 percent discount in the toll rates on all highways on the two days before Hari Raya Aidilfitri next month.

Netizens commented on the subject, many supporting the Malaysia’s replacement of GST with SST, some tried to explain the merits of the new Malaysian new Government’s move:

Jasmine Kang wrote: “CNA, a responsible and better reporting would be to explain the difference between GST and SST. My Malaysian friends explained that SST is applied just on one level while GST is applied on every level. Example, if a good/product were to leave a factory, there would be a 10% SST to the distributor, but to the retailer and then to consumer, no more tax in between the whole chain. And for GST, it’s a tax at all levels from the time it leaves factory till it reaches consumer.”

Kenneth Yeo wrote: “All GST registered companies claimed back GST paid for all purchases, only non GST registered companies and consumers are paying for GST.”

Jasmine Kang wrote: “Kenneth Yeo I know Sg does that. Do they do that in Malaysia too? Being able to claim back GST they have paid from govt? In Sg, companies have to achieve 1million in revenue before they can become a GST registered co. And it’s compulsory for them to charge GST.”

Yek SH wrote: “Jasmine Kang, well said. A lot of people doesn’t know how does SST work. So they assume it will have more impact on consumers compare with GST. Actually before the GST was implemented in Malaysia in April 2015, SST is Malaysia government indirect tax. During those years, our things still cheap although the SST is charged at 6% & 10% because it’s a single layer tax.”

Leo Cheng wrote: “Jasmine Kang you are right. Basically, GST is the tax of tax of tax of tax, depending on how many levels the product goes through. So….. at the end, the total GST 6% can be more than SST 10%. Your SG gov can really earn a lot despite another 2% increase.”

Leo Cheng wrote: “Victor Ho if a product initially costs 100 dollars and it goes through 3 processes from distributor to retailers and then to consumers, based on SST 10% the cost is 110 dollars, based on GST 6% the cost is 100*106%*106%*106%= 119.1 dollars. Can you see about half? You can use this formula to apply on your coming GST 9%.”

Andrea O M Chan wrote: “Dont forget even transportation cost will be charge GST…..all cost add up will be more expensive then SST to consumer.”

Melissa Tham wrote: “True life example : Malaysia adopted SST years before implementing the 6% GST. Example if the factory produces something at RM2, it would be RM 2.20 after SST. Then the factory sells to distributor at RM 3 each, disty to dealer at RM 4 each, dealer to enduser at RM 6 each. With GST, the cost is RM2+6%, factory to distributors at RM3+6%, disty to dealers at RM4+6%, dealers to End-users at RM6+6%. So which is better for every buyer? I’ve been running the same business for more than 17years, I know which is less burdening for businesses & consumers.”

Yan Gerek wrote: “SST is a sales and services (consumption) tax paid by end customers while GST is a tax payable by all companies. People pay SST only when consuming goods while GST is a tax payable on every transaction between companies (eg. buying goods, maintenance services, delivery costs, etc) before the end customers get served. So if a food item in a restaurant needs to pass through 5 suppliers before preparation, then GST would have been applied and collected 5 times by the government before the customer gets served.”

Ash Goh Raf Dans wrote: “End of the day, Malaysians understand the diff between SST and GST… I was living in Malaysia in the 90s. Last century 😱😱 There was SST already back then but the prices after GST was introduced was atrocious. Even my parents living in KL now complaining about the inflation since it was introduced. To say they are pissed with GST would be an understatement. They are ok with SST. Malaysians were paying SST before Najib came up with this blood sucking idea to kill Malaysians faster.”

Many netizens berated the Channel News Asia (CNA) for misleading readers with the caption, “Malaysia is looking into a sales and services tax of 10% to replace the 6% GST.”; here’s some of them:

Li Ying wrote: “Ahya.. they must put 10% to show that 9% is still lesser than Msia. CNA dun care Simi level..they only make sure the people interpret as “SST IS 10% WHILE GST IS ONLY 9%” so Singapore gov is still better.”

Alex Tan wrote: “CNA is the incumbent’s loud hailer mah, want to use this 10% SST to make our 9% GST look lower in comparison.”

Tern Aik Wei wrote: “An extremely misleading headline…. ask any msian and they will tell you they will choose SST over GST anyday. But then again, what can i expect from a gahment controlled media out to fool only the ignorant.

Larry Hakuna wrote: “CNA should go beyond parroting and produce insightful articles – from tax professionals and the like – about the pros and cons as well as other relevant factors between adopting a SST vs GST model for goods and service tax and for SG’s service driven economy which would make better sense.”

Gi Ri wrote: “CNA, how much your pro gov paying you for this headline…lol…u sound like Malaysia pass government..tui”

Hong Chuan Ho wrote: “Again try to smoke the local that SST 10% is a higher tax compare Coming-9% GST.”