State government to absorb GST on local council service charges from June 1, move to cost state about RM3 million annually
Dato Sri Wong Soon Koh
KUCHING: Effective June 1, local authorities in the state will not impose any Goods and Services Tax (GST) on the charges for services provided to the ratepayers as the state government will absorb the tax.
Local Government and Community Development Minister Dato Sri Wong Soon Koh said the GST collected from charges for services provided by the 26 local authorities would be about RM3 million.
“When the state government says it will absorb the tax, it does not mean we don’t have to pay for it. The state government will have to come out with the amount to pay to the federal government because GST is collected by the federal government, not the state government,” Wong explained.
Wong said the state cabinet endorsed the move during its monthly meeting yesterday.
Wong added that the exact amount of GST the state government had to shoulder had yet to be ascertained as the local authorities needed time to work out the total as they provided many services to ratepayers for which a fees were charged.
These include parking, desludging, swimming pool, library services, grass cutting, shoplot renting and council flat renting.
The calculation is complicated as some of the services provided by local councils had been privatised while others are still managed by them.
He disclosed at the moment only Sibu Municipal Council had come up with the total GST of RM478,000 which it would have collected from ratepayers annually.
“Most local councils are still working out the details,” said Wong, who is also United People’s Party president.
He said all local councils were the front-liners of the state government and their services reflected on the image of the state government.
“Against the will of the government, GST has created a chain of reactions resulting in prices of goods going up. We are very glad that we are the first of all government departments to do a good thing by lessening the burden of the people.”
“In return, I hope Sarawakians will not take it for granted but able to see the big picture of the overall effort of the state government in making things easier for the people by not only abolishing tolls, standardising ferry crossing fees and also now absorbing GST of all services provided by local councils,” said Wong who is also Second Finance Minister.
Chief Minister Datuk Patinggi Tan Sri Adenan Satem had announced that the state government would absorb GST on all services rendered by local authorities last Sunday in Sibu at the ceremony marking the abolition of the Lanang Bridge toll.
Sarawak is the fourth state to absorb GST on local government’s service, after Johor, Penang and Terengganu.