KUALA LUMPUR – Prime Minister Datuk Seri Anwar Ibrahim has not discounted the possibility of reintroducing the controversial goods and services tax (GST) in the future, provided the income level of Malaysians is elevated by then.
Anwar, who is also finance minister, said he has never suggested that GST would be off the table for as long as he heads the government, acknowledging it to be the most transparent and efficient taxation system.
However, he said implementing it at a time when many among the public are suffering from abject poverty or earning below the minimum wage would be irresponsible.
“If you have enough funds and liquidity in the system, then you can say ‘alright, we can pass it (tax) on to the poor’. But we don’t have that,” he said in a recent interview with Bloomberg.
“I think any responsible leader should not dwell on issues of taxation until these basic issues affecting the poor and the general public are dealt with.
“But I can’t discount the possibility that once, for example, you raise the income level of the people to RM3,000, RM4,000, then you can deal with it. Otherwise, you are taxing everybody.”
Anwar was asked if he would consider reimplementing GST to refill the government’s coffers, despite his coalition Pakatan Harapan (PH) previously objecting to the tax system.
Previously, prior to the 2018 general election, PH had made its election promise to abolish GST, which was introduced by the Datuk Seri Najib Razak’s Barisan Nasional administration in April 2015 at a 6% rate, replacing the sales and service tax (SST) regime.
After its triumph on May 9, 2018, the PH government immediately announced the zero-rating of GST, before completely abolishing the value-added tax system and replacing it again with SST in September of the same year.
Since then, there have been growing calls from various quarters, including business players, to reintroduce GST to enable a faster reduction in fiscal deficit and lower the national debt.
Yesterday, Deputy Finance Minister Datuk Seri Ahmad Maslan said that since its formation, the unity government had never discussed the possibility of re-introducing GST in the upcoming retabling of Budget 2023, which is scheduled for February 24.
He noted that GST is a sensitive issue and would require the government more time to commit to any possibility of re-implementation, as it would also necessitate educating the public.
Meanwhile, Anwar acknowledged the need to reduce the fiscal deficit but maintained that this should not be done at the expense of public welfare, the poor, and the education and health systems.
“We have to navigate this very carefully. We are fortunate that the revenue from taxes and petroleum and gas have increased slightly, but our policy to reduce the deficit must continue.”
The previous government led by Perikatan Nasional has set a fiscal deficit target of 5.5% of the gross domestic product (GDP) in 2023.
Anwar also expressed confidence that the government would be able to achieve GDP growth of around 4%, in line with the World Bank’s projection.
“We are quite comfortable with the results of the fourth quarter.
“Although the projection is more negative next year, I’ve seen this sort of more positive changes in the last few months and I hope we can sustain that.” – The Vibes, February 1, 2023
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