Prime Minister Anwar Ibrahim today reaffirmed his decision not to reintroduce the goods and services tax (GST), saying it was based on concerns about its impact on the public rather than political considerations.
He said the government would have no reason to reject the GST on political grounds if the tax genuinely benefited the economy and the people.
‘I am firm in my decision not to reintroduce the GST. It is not about politics. What has politics got to do with it if it benefits the national economy and the people?’ he said.
Anwar was responding to a supplementary question from Ronald Kiandee (PN-Beluran) during Minister’s Question Time in the Dewan Rakyat.
Ronald had asked whether Anwar’s opposition to bringing back the GST was politically motivated.
SST and GST revenue contributions
The GST, a multi-stage consumption tax, was introduced in April 2015 at a rate of 6% before being zero-rated in June 2018.
It was replaced by the sales and service tax (SST) in September 2018, in line with the manifesto of the Pakatan Harapan-led administration at the time.
Responding to a separate question from Howard Lee (PH-Ipoh Timor) on calls by government and opposition MPs to reinstate the GST, Anwar said revenue from the current SST amounted to 3.2% of gross domestic product, matching the proportion contributed by GST revenue in 2017.
He said there was therefore no basis for bringing back the GST on the grounds that it would increase government revenue.
GST has wider impact on consumers
Anwar said the SST was imposed on businesses, particularly at the import stage, while the GST was a broad-based tax that also affected consumers.
‘The GST is a tax on the wider population. The SST is a tax on businesses, although some of the burden is passed on to the people,’ he said.
On Aug 18, Anwar said the government was prepared to study proposals to combine elements of the GST and SST, particularly features of the GST that could make taxation more efficient.
The government has repeatedly dismissed calls to reinstate the GST, with the Finance Ministry saying it would only consider doing so when Malaysia’s median wage exceeds RM4,000.
