GST is to be questioned...

GST is to be questioned when Sales Tax is also retained in Sabah and Sarawak

GST or Goods and Service Tax has been implemented since April 1, 2015 in Malaysia to replace Sales Tax and Service Tax for certain business activities.

The Sales Tax in Sabah for some decades had been 15% and the State Government collects it as state revenue. 

While there is a question over the challenge by Political activist and author of the book The Queen's Obligation, Zainnal Ajamain that GST and the double tax Sales Tax still applied in Sabah is a violation of Malaysia Agreement 1963, I would like to add certain aspects that had been overlooked.

How to deal with this anomaly of sort of double taxation when GST and Sales Tax are still enforced making the products like palm oil less competitive hence more costly to consumers and the “gambling tax” as duplicated too?

 The latest State budget 2017 mentioned that “the revenue collection for State Sales Tax on Crude Palm Oil (CPO) remains the second highest contributor to the State’s revenue. Alhamdulillah, the current CPO price has increased to an average of RM2,500 per metric tonne compared to RM2,200 per metric tonne last year. Thus, the Government has projected a collection from the State Sales Tax on CPO for the year 2017 amounting to RM936 million or 24.5% of the total State Revenue Budget in year 2017.”

Also stated in the Budget speech was “Meanwhile, the revenue estimates for the State Sales Tax on lottery tickets for the year 2017 is expected to remain at RM70 million. Whereas the estimates for the Sales Tax for Slot Machines is expected to increase to RM12.5 million in 2017 compared to RM11.5 million for the year 2016.”  Also are lottery tickets be subject to GST when they are not goods and service but gambling stakes?

What would Harris Salleh say about the paramount authority of the Parliament over State Assembly in this awkward status of the still applied Sales Tax?  Why such departure is permitted by the Federal Government in this instance?  How can this be justified?

It was mentioned that GST was to replace Sales Tax and Service Tax, but Sales Tax at 15% was still retained in Sabah and Sarawak.

It has been argued that Sales tax goes to the State coffer and that the State has the authority to continue to implement such tax.  Is this legal in term of governance as a nation?

The consumers in Sabah and Sarawak are powerless to force the removal of Sales Tax.

The other issue to be raised is “Are the portion of GST returned to the respective state/partner of MA63 and in this context is Sabah getting back 40% of the GST collected in Sabah including those amount paid by groups of companies with operations in Sabah?”

Another issue is that postage stamps only subject to GST recently in 2016 and not from April, 2015.  Was this an overlooked item?

There are too many ironic developments and Sabah seems to be always at the receiving end of injustice.

Joshua Y C Kong 23 November, 2016