Seek exemption from GST, Sabah told

JANUARY 15, 2014

A vendor at the Donggongon Tamu (Pasar Donggongon) in Penampang,
Sabah catches 40 winks during a lull in trading on August 30, 2013.
— Picture by Choo Choy May

KUALA LUMPUR, Jan 15 — The Sabah state government must attempt to win a reprieve from the impending Goods and Services Tax (GST) to avoid sending the country’s poorest state into a “nightmare”, Datuk Jeffrey Kitingan said today.

Saying that the state was already reeling from the rapid-fire subsidy cuts and price increases sweeping the nation, the president of the STAR party warned that cost of living could rise by as much as 20 per cent once the new consumption tax is rolled out in 2015.

“Even without the recent price hikes and the GST, Sabahans are already burdened with much higher costs due to the crippling cabotage policy,” he said in a statement today.

The cabotage policy was imposed in 1980 by the federal government in a bid to integrate all Malaysian maritime laws under the Ministry of Transport, but is blamed for creating a shipping cartel that has led to higher prices for goods in Sabah and Sarawak.

The opposition politician said that the only other to offset the impact of the GST was to increase the wages of workers in Sabah by 6 per cent, as recommended by KPMG Malaysia.

“Since this is not workable, the other option is to work with the federal government and seek the exemption of Sabah from GST in 2015 for at least 3 to 5 years,” Jeffrey added.

Pointing out that the country continues to benefit from the oil extracted from the state, he said this along with Sabah’s contribution to Malaysia’s palm oil industry warranted the exemption.

The introduction of the GST was announced during the tabling of Budget 2014 last year.

Malaysia’s proposed GST rate of 6 per cent, which will be enforced from April 2015, is the lowest in the region, whereas most countries implement a 10 per cent value added tax (VAT).

The consumption tax was first announced during Budget 2005 and was originally scheduled to be implemented in 2007, and tabled for the first reading in 2009 for implementation in late 2011, but was withdrawn during the second reading in 2010 following fierce public resistance.

Unlike income tax, which is only applicable after a certain salary level is exceeded, the GST means all Malaysians will be taxed according to their level of spending, regardless of income.

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