MALAYSIA: 2018 GOVT REVENUE DROPS TO RM21 BLN WITH SST, SAYS FINANCE MINISTER

KUALA LUMPUR, Malaysia The Finance Ministry says the government revenue for 2018 will decline to RM21 billion after the reinstatement of the Sales and Services Tax (SST) on Sept 1, 2018 to replace the Goods and Services Tax (GST).

Minister Lim Guan Eng said the revenue from the SST for the period from September to December this year is estimated at RM4 billion. The net impact, therefore, is RM17 billion for 2018, he said at the Dewan Rakyat here today.

Lim was replying to Datuk Seri Ismail Sabri Yaakob (BN-Bera), who wanted to know the reduction in revenue after the government abolished the GST as well as the government’s measures to cover the revenue shortfall.

Lim said the GST revenue shortfall will be partly made up by the higher petroleum revenue estimated at RM5.4 billion following the rise in Brent crude prices to US$70 per barrel compared to the average oil price assumption of US$52 per barrel for Budget 2018.

He said in addition, the dividend from government-linked companies (GLCs) including Petronas and Khazanah Nasional Bhd had risen to RM5 billion.

This additional dividend is one-off, in line with the rise in global crude oil prices in 2018 compared to the average oil price assumption for Budget 2018, he said.

Despite global crude oil prices hovering at around US$70 per barrel, Lim said petroleum-related revenue contributed only around 3.3 per cent to gross domestic product compared to 9.2 per cent in 2009, when global crude oil was at US$62 per barrel.

This shows that the government has reduced the dependence on petroleum-related revenue, he said.

Lim noted that other measures to increase the federal government’s revenue include continuous audits and investigations by the Inland Revenue Board of Malaysia and the Royal Malaysian Customs Department in order to raise tax compliance and reduce the tax gap.

The government will also explore new revenue sources especially from online transactions and review of tax incentives in order to generate economic activity and minimise the impact of the revenue reduction, he said.

The government will also implement budget rationalisation by rearranging expenditure priorities and reviewing, postponing and renegotiating high-cost projects, he said.

Besides, the government will also rationalise the functions of departments, programmes and projects to avoid overlap and to enhance governance related to public procurement in order to become more efficient and transparent, he added.

Lim said these measures are expected to reduce overall expenditure by RM10 billion.

However, Lim said, the government is still committed to the Pakatan Harapan manifesto, an important part of which is to reduce the cost of living for the people.

He said the stabilisation of prices of RON95 petrol and diesel at RM2.20 and RM2.18 a litre respectively has resulted in lower prices for Malaysians, costing the government RM3 billion in fuel subsidies as of December this year.

In addition, he said, special assistance has also been given to civil servants at grade 41 and below as well as retired civil servants, costing the government some RM700 million.

The government will continue to ensure strong economic growth in the effort to balance the financial situation and debt level, he said.

Source: NAM News Network