Exempt public projects from GST, says DAP

Putrajaya should not impose the Goods and Services Tax (GST) on building of public roads as such projects were meant to benefit the people, the Penang government urged.

Chief Minister Lim Guan Eng said if the government was imposing the 6% tax on building roads, all public infrastructure projects would be subjected to GST too.

This, he said, would burden the people, who are ratepayers.

"When we call for open tenders for projects, bidders will factor in the GST as well in the construction costs.

"Ratepayers will have to bear this additional cost. "Why is the GST imposed on something that is done for the good of the people when it is not to get profit?" he told a press conference in Komtar today.

Lim was raising the issue because of a tender for a road building project to connect Jalan Bunga Hinai and Jalan Bunga Kaca Piring in Penang. In the detailed tender abstract, the cost of the package is RM2.33 million. Of the amount, RM112,680 is itemized as GST.

"The federal government should ensure that projects for the good of the people should not be subjected to GST," Lim said of the tax that will be imposed beginning April 1.

Previously, the Penang government had also raised concerns that the GST would affect the local councils, increasing their management and administration costs.

Lim told the media last month that local councils in Penang would have no choice but to transfer the increased costs to the people – debunking any claim that only businesses would be affected by the GST.

DAP MPs from Penang, Zairil Khir Johari and Steven Sim Chee Keong also recently highlighted how MPs were going to see their constituency funds slashed with the implementation of the new tax.

"This is because whatever supplies procured or projects implemented will carry an additional 6% cost in the form of the GST," they told a press conference recently.

In the state, MPs are allocated RM200,000 a year, out of which RM80,000 is meant for small-scale projects such as minor infrastructure works.

The remaining RM120,000 is for buying supplies, which are mostly to assist non-profit organisations in the constituency.

With the GST enforced, they claimed that the real functional value of a Penang MP’s constituency allocation will be reduced to just RM188,000 a year, with RM12,000 going to the tax. – February 24, 2015.