SST preferred over GST to reduce people's burden: Johan Merican
KUALA LUMPUR: The government has chosen to maintain the Sales and Service Tax (SST), instead of reintroducing the Goods and Services Tax (GST), in order to reduce the tax burden on the people.
Treasury secretary-general Datuk Johan Mahmood Merican said while GST is a more efficient and comprehensive tax system, it ultimately places a heavier burden on end consumers.
"GST has its strengths. It is broad-based, covers nearly all goods and services, and applies at every stage of the supply chain. From a revenue collection perspective, it is very effective because it captures the entire economy.
"However, under GST, the final tax burden falls entirely on the rakyat. Businesses can claim back the GST they pay, but the end consumer cannot," he said.
Johan was speaking during a TikTok Live hosted by the Finance Ministry titled 'SST Naik, Semua Harga Pun Naik?', aimed at addressing public concerns over the upcoming expanded SST and its implications.
Johan explained that while SST is less efficient from a taxation standpoint and does not cover as wide a range of economic activities as GST, it imposes less financial pressure on the public.
"SST has been part of our tax system since the 1970s, so it is familiar and easier to implement. It is also more targeted, as we avoid taxing essential goods and focus more on taxing businesses," he said.
Johan noted that the government aims to collect an additional RM10 billion in revenue under the SST system. By comparison, reinstating GST with its previous framework could bring in more than RM20 billion.
"From a business point of view, GST may be preferred because companies can claim back the tax paid. But some businesses may find SST burdensome, as they have to absorb the tax without the ability to recover it," he said.
He added that the government's decision reflects a balancing act between raising national revenue and safeguarding the rakyat from higher living costs.
"Even though SST may be less efficient in terms of tax collection, it allows us to minimise the impact on consumers.
"That's why we've chosen to expand SST rather than reintroduce GST for now," Johan said.
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