Johor government should not absorb GST

Media statement by DAP Johor Chairman and MP for Kluang Liew Chin Tong on 10th May 2015 in Kluang

It is regrettable that the Johor state government has chosen the easy way out in dealing with GST by absorbing the GST tax to be imposed on government services.

Instead, the Johor state government should collaborate with other state governments to object to the tax, or at least, object to the imposition of GST on services provided by local and state governments.

The Johor government has announced plans to absorb RM3.19 million in Goods and Services Tax (GST) imposed on services provided by the local government, days after state ruler Sultan Ibrahim Sultan Iskandar criticised the use of the taxation system for government services.

Johor state housing and local government committee chairman Datuk Abdul Latif Bandi said the services include rental and licensing fees under the state government’s 16 local councils.

“The state government will absorb the GST costs for local councils, which are expected to be RM3.19 million involving 16 local councils state-wide this year.

In my view, the Johor State Government should work with other state governments to present a joint position on the matter at the National Finance Council and not to seek the short cut of absorbing the GST at the expense of Johor’s taxpayers.

The Federal Government’s estimated revenue in Budget 2015 is RM235billion while the Johor State Government’s estimated revenue for Budget 2015 is RM1.239billion.

It just doesn’t make sense for the State to absorb the GST when the state is receiving such a meagre sum of revenue compared to the Federal Government.