Prime minister Datuk Seri Anwar Ibrahim has said Malaysia has no plans to reintroduce a goods and services tax (GST) or any other broad-based consumption tax, NST reports. Anwar, who is also finance minister, added that the government will instead focus on cutting subsidies enjoyed by the rich as well as reducing wastage and corruption in his administration to lower the country’s debt.
“What we will implement include the subsidy reduction for the wealthy, such as the electric tariff for the T20 categories,” Anwar said in response to a question from Taiping MP Wong Kah Woh in Parliament yesterday.
“As I have explained before in a previous session (in the Dewan Rakyat), the government has decided to impose subsidy reduction on the T20 categories as well as multinational and large companies, except those dealing with food security even when the previous administration decided to increase the tariff,” he added.
The prime minister noted that government debt and liabilities currently stood at RM1.5 trillion, or about 82% of the country’s gross domestic product (GDP). Anwar said restoring good governance was important, as the spending of money (during the previous administration) was due to poor management and leakages that led to an increase in the country’s debt.
“As the country’s debt is higher than the economic growth, other measures to be taken include reviewing the public expenditure and for the revenue base to expand without burdening the people, particularly in the education, health and basic needs sector,” he explained.
Talk of Malaysia reintroducing GST surfaced last year when previous prime minister Datuk Seri Ismail Sabri Yaakob suggested it in an exclusive interview with Nikkei. “We lost RM20 billion in annual revenue when we abolished the GST and replaced it with the old SST. No other country in the world has reverted back from GST to SST, except for Malaysia,” he told the publication at the time.
The GST replaces the sales and service tax (SST) in April 2015 but was then scrapped in favour of bringing back SST in September 2018 when the Pakatan Harapan government took over the reins. We’ve covered the impact of GST on the automotive industry and car prices in the past, which is worth a read to understand the mechanics of both taxation systems.
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