KUALA LUMPUR – August 14, 2018: If you are still confused with the missing GST money drama, last night’s Facebook interview with former second finance minister Datuk Seri Johari Abdul Ghani may be the much-needed tonic to calm your senses.
In dismissing the claim that the previous government had robbed the Goods and Services Tax (GST) fund meant for as reimbursements, Johari went on to explain how the government’s ongoing three-month tax holiday had inadvertently dried up the fund.
The ticklish drama unfolded last week after Finance Minister Lim Guan Eng accused Barisan Nasional of stealing RM18 billion of the RM19.4 billion in the trust fund, a claim strongly refuted by former prime minister Datuk Seri Najib Razak and Treasury secretary-general Tan Sri Irwan Serigar.
“Of course, there won’t be any more money in the fund because there has been no GST collection in the past three months while the Treasury still has to keep on reimbursing input tax claimants,” clarified Johari, the man who oversaw GST matters from 2016 until BN’s defeat in GE14 last May 9.
The simple analogy from Johari was that if a car vendor bought 1,000 cars, the company would have to pay the government the input tax for all of them but can only claim the input tax based on the number of cars sold.
“Mind you some businesses paid the government input taxes for a three or nine-month worth of stocks. So that is why traders and manufacturers continue to claim input taxes despite the tax holiday,” he asserted.
A day after Lim made the accusation, Customs director-general Datuk Seri T. Subromaniam issued a statement tp say that from April 2015 (when the GST was introduced) until the end of last May, only RM63.5 billion of the RM82.9 billion of refunds claimed had been paid out.
But back to Lim’s allegation.
Even if the fund runs dry, Johari points out that the government can always refill by pumping in monies from the consolidated revenue account (CRA).
The CRA is basically the country’s sole piggy bank, where all proceeds, be it nett or gross, are deposited before the monies are allowed to be channelled for various purposes, including emoluments and GST input tax claims.
“Basically the money to be used to reimburse input tax claims is part of the money in the CRA. So they should just take the money from there and pay the remaining claims,” said Johari.
While not denying that the BN government’s inefficiency may have contributed to the late reimbursements of GST input tax which eventually led to price hikes, Johari said manufacturers and traders were equally responsible for the problem.
Under the GST regime, the government was required to refund businesses’ input tax in 14 to 28 days should the latter submitted the required documents.
According to Johari, the delay in refunds was due to a number of factors, including fraudulent claims and incomplete documentation.
“Customs and Treasury officers would first meet on a monthly basis to discuss the amount of verified input taxes to be reimbursed. Only after that would the money from the CRA be transferred into the trust fund.
“If I can meet them (Customs and Treasury officers) I would want them to give me the breakdown on the non-compliance committed by these businesses which have had they refunds delayed,” he said.
Another critic of the Lim claim is Malaysiakini editor P. Gunasegaran.
And why is that? “Because Lim granted a populist tax holiday from June 1 to August 31. Not only was there no GST collection, there was no Sales and Service Tax collection either.
“The previous government paid out GST refunds from income received from ongoing tax collections. With that having dried up completely, perhaps Lim is finding out he can’t find the money to pay for the refunds and may have to borrow. One way out of this predicament is to simply blame the previous government, of course,” commented Guna.