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PUTRAJAYA - The government is urged not to treat Malaysians and businesses as guinea pigs following a proposal to merge elements of the Sales and Services Tax (SST) with the Goods and Services Tax (GST) into a single hybrid system.
Parti Wawasan Negara national information chief Wan Ahmad Fayhsal Wan Ahmad Kamal said the government must explain in full detail what the proposed hybrid system would look like before moving ahead with any implementation.
He highlighted that a tax policy change of that magnitude could not be made on a trial-and-error basis, as the consequences would be borne by millions of consumers and business owners.
"The government cannot simply say it wants to take the best of both systems, because GST and SST have fundamentally different structures.
"If a merger is intended, the public and the business community have the right to know the mechanism, the tax rate, the scope of goods and services, the registration threshold and how input tax credits will be handled," he said in a statement on Wednesday.
Wan Ahmad Fayhsal who is also Machang Member of Parliament (MP) said businesses needed certainty and not fiscal experimentation, particularly when small and medium enterprises were already navigating multiple operational changes.
He said SMEs were simultaneously adjusting their accounting systems and operations to comply with e-invoice requirements while absorbing rising costs in raw materials, utilities, energy, logistics and wages.
"Any new tax system will bring additional costs, from software changes and staff training to accounting fees and the restructuring of invoicing processes and claims," he said.
"That is why the government must present an impact study and compliance cost assessment before announcing any new policy direction. Do not announce the slogan first and figure out the system later," he said.
On Tuesday, Prime Minister Datuk Seri Anwar Ibrahim, who is also Finance Minister, was reported to have said the government was open to reviewing a tax system that combined elements of SST and GST to form a more progressive and efficient framework.
However, the proposal did not mean GST would be fully reintroduced, with the government maintaining SST as the base of the current tax system while studying which GST elements were suitable for adoption.
Wan Ahmad Fayhsal stated that the impact of any tax system change would not be limited to businesses alone, as higher operating costs were likely to be passed on through the prices of goods and services.
"The ones who will ultimately pay are consumers. If the government claims this hybrid system is more progressive and will not burden lower-income groups, then prove it with figures," he added.
He questioned how much additional revenue the government stood to gain, what costs SMEs would have to bear and what the effect on inflation and the price of goods would be.
"Who will end up paying more and who will pay less? These questions should be answered before a new system is announced, not after the public and businesses are asked to adapt," he said.
Wan Ahmad Fayhsal also questioned why SST, long defended as a more targeted tax system, was now being seen as needing elements of GST to supplement it.
"If GST was once said to be too burdensome on the people, which elements of GST are now being proposed for reintroduction?" he asked.
He stressed that the government also owed the public a clear explanation for its change in stance on GST, given that it had previously insisted the tax would not return and that SST would remain in place.
"The people do not need another new name for a tax. They need policy stability, certainty over rates, a system that is easy to comply with and a guarantee that tax changes will not ultimately raise the cost of living," he said.
He called on the government to spell out the proposed system, state the applicable tax rates and present a full impact study to both the public and the business community.
"If not, the people will have every reason to see this as yet another 'Cukai Madani', the name may be new, but the burden will still reach the people," he added.
