Allow GST’s tax refund for business-to-business deals, govt told

The government has been advised to allow businesses to reclaim tax paid on costs under the goods and services tax (GST) scheme when conducting transactions with other businesses. Currently, the sales and service tax (SST) does not permit such refunds, leading to "cascading taxes" where costs are taxed multiple times as goods and services change hands.

This results in higher prices for consumers. Experts argue that integrating GST components into SST, particularly for business-to-business deals, would stop tax accumulation and lower costs for consumers. This move would prevent the imposition of a broad GST on the public, making the system more progressive. A reverse tax refund mechanism, similar to GST's provision for businesses to claim back tax on operational costs, would avoid a lose-lose situation where either suppliers or consumers bear the brunt.

However, caution is urged in implementing such changes, with the government advised to introduce modifications gradually while safeguarding essential goods and basic services from taxation.