KUALA LUMPUR (March 9): Reintroduction of the Goods and Services Tax (GST) is expected to improve the government’s tax collection, with the additional revenue utilised to alleviate poverty, says Deputy Minister of Finance I Datuk Seri Ahmad Maslan. 

“We are still studying, evaluating, on when is the suitable time, we are not ruling out GST, that is what I can say, it is just that it will not be implemented for this year,” he told Dewan Rakyat during the Minister’s Question Time session. 

“The government has not proposed to reintroduce GST, this has been made known in [revised] Budget 2023,” he added.

Ahmad Maslan (Umno-Pontian) was responding to Saniswara Nethaji Rayer Rajaji (DAP-Jelutong), who asked whether the government will reintroduce GST. 

“Whether we can achieve a lower fiscal deficit, it depends on whether we can make a decision on GST or not, but there are other means that we are trying to do, such as e-invoicing,” he said. 

“E-invoicing will be implemented, and it has already been started by LHDN [Inland Revenue Board]… so we can reduce black economy. GST can limit black economy, shadow economy, underground economy, which amounted to about 30% of GDP.

“GST can take 20% off that 30%; we hope by adopting e-invoicing, businesses become more transparent, and reduce the size of shadow economy while increasing our collection, before any decision is made on GST,” he added. 

Ahmad Maslan said the government’s current approach is to have a more progressive taxation system to broaden the tax base to include those in the affluent group, through measures like the introduction of luxury goods tax, capital gain tax on unlisted shares disposal, and tax on electronic cigarettes or vape.

He said GST, if implemented, can be designed in a progressive manner in the future, by having zero-rated tax on goods and services that are basic needs for the poor, similar to the previous implementation between 2015-2018. GST was repealed by the PH government in 2018, replaced by the current Sales and Services Tax (SST).

“If GST is reintroduced, Malaysia’s taxation system in general, will remain progressive where those who are more affluent bear heavier tax compared to the poor, or at least able to achieve a proportional tax system, whereby every income group bears tax burden that commensurate with their respective financial strength,” he said.

For more Parliament stories, click here.