KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - Malaysia will lose RM416.6 billion (S$140.1 billion) in revenue if the Goods and Services Tax, tolls, National Higher Education Fund loans and excise duty were abolished, said Ministry of Finance Secretary-General Mohd Irwan Serigar Abdullah.
He said the abolition of GST would cause the country to lose RM45 billion; the toll, RM338 billion; the National Higher Education Fund Corp loans, RM3.9 billion; and excise duty, RM2.4 billion.
Tan Sri Dr Irwan said the abolition would also increase the country's debt.
"We will lose RM45 billion if we eliminate GST. It's a big figure and we did not introduce it just like that, (but) we have been studying for years."
Dr Irwan said he was worried about recent newspaper and social media reports on the current economic conditions.
"More than 500 basic items, among them, rice, sugar, vegetables and medical goods are not subjected to GST because the tax here is different from other countries," he said.
"In India, which introduced GST after Malaysia, the rates are variable at between 5 and 28 per cent."
Dr Irwan said Saudi Arabia would also introduce GST as it was too dependent on oil.
"When the oil prices dropped, the government's revenue would be unpredictable. In this respect, Saudi Arabia is in talks with experts from Malaysia to introduce the GST," he said.
"When the GST was introduced in Malaysia on April 1, 2015, oil price fell from US$100 per barrel to less than US$40 per barrel and government's revenue fell. We cannot be in a state of uncertainty. We have to pay salaries, manage the state, hospitals, education and they need revenue," he said.
Dr Irwan said if the country did not collect revenue, the government could not implement national programmes and as the Malaysian economy grew, the revenue would increase and the country could bear the expenditure.
"If we forgo the GST, then we will lose RM45 billion and even if we were to reintroduce the sales and service tax, the collection will amount to RM18 billion, so how can we find the RM27 billion?" Dr Irwan said.
"On the toll, the (Finance Ministry) has to pay compensation to companies because they have investors, such as the Employees Provident Fund, which earn money which come from these tolls," he said.
"In the Klang Valley there are 19 tolls, while outside the Klang Valley there are 12. If the government wants to step in, we have to pay RM338 billion," he said.
"If we add the RM338 billion with national debt of RM686 billion, our debt will increase to RM1 trillion, and if we divide the size of Malaysia's RM1.3 trillion economy, it means that our country's debt has risen to 78 per cent," he said.
Dr Irwan said Malaysia has a policy where national debt should not exceed 55 per cent of gross domestic product, which is now at around 50 per cent.
"When we are in debt, the rating agencies will rate us. Now we are at A-, a strong rating. The investors will come when the nation is stable. However, if the debt grows bigger investors will not invest and the economy will be unstable," he said.
On the National Higher Education Fund (PTPTN) loans, Dr Irwan said, the government also gave relief.
"If the student's score is good, he does not have to pay back PTPTN, and if it was consistent in paying, PTPTN will give 10 to 20 per cent discount," he said.
He said the country's economy was on track in terms of financial management and has recorded a growth of 5.9 per cent in 2017.
"Our economy is on a solid track. It grew 5.9 per cent last year and this year we expect the economy to continue 5- 5.5 per cent," he said.
Dr Irwan said the inflation rate is under control and expects 2-3 per cent this year while the unemployment rate is at a low of 3.4 per cent. The ringgit strengthened at RM3.90 against the US dollar.
"We will keep this momentum," he said.
"I am a senior official of the Ministry of Finance, it is my responsibility to clarify the real situation of the economy," he said, adding that he has been with the ministry since 2002, and now has more than 15 years of experience making the government budget.