"Service charge is collected by the restaurants and coffee shops for their employees, so they can pay them better salaries.
"Previously service charge was also taxed with Goods and Services Tax (GST) but now no longer since we imposed Sales and Services Tax (SST).
"We have made many changes to make it easier for restaurants and coffee shops so the impact of SST is lesser on them," he said during a press conference held after celebrating the Lantern (or mid-autumn) Festival 2018 at Penang Hill on Saturday (Sept 22).
When asked if the Finance Ministry will come up with a guideline on the percentage that can be charged as service charge, Lim said he was not talking about taking action but urging them to reduce their service charges.
"I am asking them to be reasonable to their customers," he said.
On a separate matter when Lim was asked about Datuk Seri Najib Tun Razak comments that the former (Lim) had finally admitted that the prices of goods rose following the implementation of the SST, Lim said that if the price of goods has gone up due to SST, the impact is still only half the impact of GST.
"We hope the price of goods is controlled, we see the price of things have reduced.
"We have seen the the effect of SST, we did not say SST would reduce the prices but the impact would be half of GST.
"We will know the complete impact of SST in one year's time.
The estimated annual GST collection was RM44bil, while SST will only net RM21bil," he said.
Lim said the former Prime Minister should not confuse people.
"He should speak based on facts and figures.
"He lost the previous elections because of the burden of GST," he said.
It was reported that Najib had said in a Facebook post that Lim’s admission was in stark contrast to his special officer Tony Pua’s recent claim the prices of goods would go down after the re-introduction of the SST.
In September, the Pakatan government reintroduced the SST to replace the GST implemented during Najib's administration in 2015.