PUTRAJAYA (Sept 13): Economy Minister Rafizi Ramli said reintroducing the goods and services tax (GST) to expand the nation’s coffers may hit hard on lower income households.
He concurs with the views of GST is an most efficient tax in combating tax evasion, but it might add tax burden on the low income households.
“That is why the government, including the current administration, we have to be very careful to see whether we take a shortcut just to resort to GST and plunged millions of households that are not in the tax income bracket before, and suddenly they have to pay GST, and that is when it become regressive,” he said at the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Power Chat and the launch of 17th World Chinese Entrepreneurs Convention.
He said that the government is open to introducing consumption taxes, such as GST or sales and service tax (SST), but it needs to critically review amid the economic constraints and inflationary pressure.
“I did not say that we are not going to impose any form of consumption tax but I think we really have to look at the details [the impacts],” he said.
“But if we do [want to implement] GST, on the basis that we want to widen our (tax) revenue base and strengthen our fiscal position, we must make sure that it is able to meet the existing SST collection,” he stressed.
Separately, Prime Minister Datuk Seri Anwar Ibrahim said that Malaysia is not ready for the reinstatement of the GST anytime soon, he told Bloomberg at the Milken Institute 10th Annual Asia Summit.
He said that Malaysia’s household incomes and thresholds must first be increased to a reasonable level before the GST can be reintroduced.
In Asean, Malaysia is among the few nations that do not impose GST, besides Brunei, and Myanmar.
Indonesians have been paying GST for 39 years since 1984. Thailand imposed value added tax (VAT) in 1992 and Singapore in 1994. Both Vietnam and Cambodia imposed the broad-based consumption tax in 1999 and the Philippines in 1988.
Malaysia replaced the sales and service tax (SST) with GST in April 2015, but it was then scrapped in favour of bringing back the SST in September 2018, when the Pakatan Harapan government came into power.