GST proves to be more efficient than SST

The Goods and Services Tax (GST) has proven to be a more efficient tax collection system as compared to the Sales and Services Tax (SST), while helping compensate for the fall in revenue due to the sharp decline in oil prices.

Prime Minister Datuk Seri Najib Razak said the tax regime is projected to rake in revenue of RM39 billion next year, as compared to RM18 billion if the government had continued with the SST.

"Government revenue would have been lower by RM21 billion in 2016 if not for the GST," he said, when tabling the Budget 2016 in the Dewan Rakyat here today.

Najib, who is also the Finance Minister said if this was the case, the fiscal deficit would have increased to 4.8 percent and not the 3.1 percent targeted for 2016.

"The government would have then been forced to borrow, including to pay civil servants salaries, the nations credit rating would be downgraded and all borrowings costs, including personal, business and housing loans would definitely be higher," he added.

The GST was implemented on April 1 this year at the rate of six percent to replace the SST of 10 percent and this year's GST collection was estimated at RM27 billion.

The tax regime has to date been implemented in more than 160 countries.