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The increase in GST collections to RM42 billion and continuing contributions from Petronas proves that abolishing GST and continuing to pay BR1M is possible

The increase in GST collections to RM42 billion this year, and continuing contributions from Petronas proves that abolishing GST and continuing to pay BR1M is possible. When replying to my parliamentary question on 7.3.2017, the Minister of Finance II Dato Johari Ghani admitted that the Federal government saved RM 20 billion in savings annually following the abolition of fuel, cooking oil and sugar. BN has claimed that GST has enabled the payment of BR1M and other projects. With the RM 20 billion savings from abolition of subsidies, there is now no need for GST.

However Datuk Johari claimed there is a need to make up for the shortfall from reduced contributions from Petronas of RM35 billion. In the past Petronas contributed RM66 billion before being reduced to RM30 plus billion contributing to around a shortfall in revenue of RM35 billion. The RM20 billion savings from subsidies reduction is not enough. The RM15 billion revenue shortfall requires the implementation of GST to collect more than RM20 billion in additional taxes from the people to enable BR1M can be paid.

However the latest issue of The Edge (March 20-27) revealed that this year, Petronas will be contributing RM13 billion compared with RM16 billion in 2016, RM 26 billion in 2015, RM29 billion in 2014. In other words the shortfall in contribution from Petronas is not RM35 billion as claimed by BN but only RM 16 billion from 2014 to 2017. This shortfall of RM16 billion is more than covered by the RM20 billion in savings from the abolition or reduction of subsidies for petrol, sugar and cooking oil.

Clearly, the Federal government does not require the GST to make up for the RM 16 billion revenue shortfall, when they enjoy subsidy savings of RM20 billion. Why continue the GST when the subsidy savings even allow BR1M to be paid? Just because Singapore implements the GST, Malaysia should not follow Singapore blindly, when there is a difference with Malaysia being a middle-income country as compared to Singapore as a high-income country. For this reason, our commitment to abolish the GST is justified financially without affecting other programmes such as BR1M.

Penang Chief Minister
Media statement by Lim Guan Eng in Komtar, George Town on Monday, 20th March 2017