MALAYSIA'S priority should be raising wages and household incomes rather than reintroducing the Goods and Services Tax (GST), as the country's main fiscal challenge stems from low earnings rather than weaknesses in its tax system, Deputy Finance Minister Liew Chin Tong said.
Speaking at the ACCA Mid-Year Conference fireside chat, Liew said the government's immediate objective is to build a more prosperous economy in which more Malaysians earn enough to become income taxpayers, instead of relying primarily on consumption taxes to increase government revenue.
He stressed that while GST and other forms of consumption tax have a place in a modern taxation system, they should not be viewed as a universal solution to the country's fiscal challenges.
"The problem we face today is an income problem, not a taxation system problem. Our primary goal is to build a more prosperous society so that more Malaysians earn enough income to pay income tax.
"We should not regard consumption taxes as the main pillar of the country's taxation system," BH quoted him saying today.
Liew said calls to reinstate GST are often based on the argument that only a relatively small proportion of Malaysians pay income tax, but that debate must be considered in the context of current income levels.
He argued that consumption taxes are inherently regressive because lower-income households spend a larger proportion of their earnings on daily necessities, leaving them with a relatively heavier tax burden than higher-income groups.
"As someone earning RM2,000 a month has to spend almost all of their income on basic necessities, the share of consumption tax they bear is significantly greater than that of higher-income earners.
"This situation is not sustainable in the long term and could create dissatisfaction within society," he said.
Liew also pointed to the growing use of Buy Now, Pay Later (BNPL) facilities among young Malaysians as evidence of mounting cost-of-living pressures and insufficient household incomes to meet everyday expenses.
He said the government's priority is therefore to improve productivity and raise incomes so that more Malaysians fall within the income tax bracket.
According to Liew, Malaysia's median monthly wage remains around RM3,000, indicating that a large proportion of formal sector workers still do not earn enough to be liable for income tax.
In line with Prime Minister Datu Seri Anwar Ibrahim's position, he said a more meaningful discussion on reintroducing GST should only be considered once the country's median monthly wage reaches about RM4,000.
"When more Malaysians are earning higher incomes, that is the time we can reopen the debate on the appropriate form and rate of consumption tax.
"Before that, we need to focus on the fundamental challenge of ensuring that more Malaysians earn enough income to qualify for paying income tax," he said. - June 24, 2026
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