Lim Guan Eng has made a compelling call to action regarding the potential reintroduction of the Goods and Services Tax (GST) in Malaysia. He emphasized that Deputy Prime Minister and Barisan Nasional (BN) chairman, Datuk Seri Ahmad Zahid Hamidi, must ensure that taxpayers do not face a repeat of the financial distress caused by unpaid GST refunds, which accumulated to over RM30 billion between 2015 and 2018.
In his recent statement, Lim, who represents Bagan in Parliament for the Democratic Action Party (DAP), pointed out that during a recent announcement about BN's intention to reinstate GST following the upcoming 16th General Election, Ahmad Zahid referred to GST as the 'most suitable and effective system' for promoting fairness and enhancing national revenue.
However, Lim challenged this assertion by insisting that before advocating for the GST's comeback, Ahmad Zahid needs to offer assurances that the significant issue of unpaid GST refunds will not happen again. He stated, "Before pushing for GST, Ahmad Zahid must first guarantee that the nightmare of GST refunds not paid, amounting to RM30 billion during its initial implementation from 2015 to 2018, will never recur."
Lim elaborated on the nature of the GST as a consumption tax intended to be equitable and efficient, particularly highlighting the necessity of input tax refunds to prevent double taxation. He lamented the failure of the previous BN government to fulfill its legal obligation to issue these refunds, which resulted in a staggering backlog of RM30 billion in just three years. This delay placed a heavy burden on businesses, disrupting their cash flow and operational stability.
The issue of unpaid GST refunds was eventually addressed by the Pakatan Harapan government after its election victory in 2019. However, Lim raised concerns that similar problems resurfaced in 2020 with the Inland Revenue Board (LHDN), where businesses continued to be owed tens of billions of ringgit in excess taxes that have yet to be refunded. He described this ongoing situation as a 'recurring nightmare' for businesses year after year since 2020.
To alleviate some of this financial strain, Lim urged the government to initiate the process of refunding these overdue amounts, proposing a substantial RM20 billion refund to assist businesses in preparing for a successful Chinese New Year in 2026.
Moreover, Lim questioned the feasibility of Ahmad Zahid's plan to reinstate the GST, emphasizing that any new implementation must come with stringent safeguards to prevent a repeat of the previous RM30 billion unpaid refunds crisis experienced under the BN administration from 2015 to 2018.
Ahmad Zahid had previously indicated that while the current Sales and Service Tax (SST) would remain in effect for the time being, there are intentions to reintroduce the GST after the upcoming general election. Lim concluded by wondering whether any concrete measures have been developed to avert another significant financial setback for businesses akin to what they endured under the former GST regime.
