KUALA LUMPUR – The government has no immediate plans to reintroduce the contentious goods and services tax (GST) due to its regressive nature, Prime Minister Datuk Seri Anwar Ibrahim said.
This is on top of the fact that Malaysians are still in the post-Covid-19 pandemic recovery phase, in addition to facing the rising cost of living, he added.
“Food inflation in 2022 was at 5.8%, and this affects the lower-income group more,” he said in a written parliamentary reply yesterday.
“At the same time, GST is also a tax that is regressive in nature.”
In this regard, Anwar, who is also finance minister, said any plan to reintroduce the tax system will only be considered once the government improves its mechanism to reduce its impact on the lower-income group.
Its re-implementation will also hinge on the economy’s proper recovery and when the country is on more solid footing.
“Any policy change pertaining to taxes will take into account its impact on the economy and the people’s cost of living.
“As such, the government will consistently monitor the current economic position and consider fiscal measures that are suitable with short and medium-term needs.”
Anwar also pointed out that in Budget 2023, the government has taken a more progressive approach that would see the rich get taxed more.
This includes increasing the income tax rate for individuals with taxable income of more than RM230,000 a year, as well as introducing a luxury goods tax and capital gains tax on the sale of unlisted shares.
“The government will continue to conduct engagements with all stakeholders to review the study of further reforms to the tax system.
“This doesn’t necessarily have to involve GST. There is also space to improve the existing sales and services tax (SST).
Previously, during an interview with Bloomberg, Anwar had said that GST will only be considered for reintroduction once the income level of Malaysians is elevated.
Prior to the 2018 general election, PH had made its election promise to abolish GST, which was introduced by Datuk Seri Najib Razak’s Barisan Nasional administration in April 2015 at a 6% rate, replacing the 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 the same year.
Since then, there have been growing calls from various quarters, including business players, to reintroduce GST and enable a faster reduction in fiscal deficit and lower the national debt. – The Vibes, March 22, 2023
