Wednesday, November 30, 2022

Finance Minister reveals government’s plan to reintroduce GST in the coming years

NewsFinance Minister reveals government's plan to reintroduce GST in the coming years

The government has plans to bring back the unpopular Goods and Services Tax (GST) as part of the government’s strategy to strengthen its fiscal measures, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

In an interview with Sinar Harian, he said the country’s economic landscape of Malaysia had not been great for the last 2 years due to the health crisis, economic crisis and political stability the country is going through.

He added that these crises had brought significant negative impact to the country’s Gross Domestic Product (GDP) and caused the unemployment rate to rise to more than 5% for several months, especially during the implementation of the Movement Control Order (MCO).

Source: The Rakyat Post

He said the Finance Ministry is well aware of the importance of reforming the country’s fiscal sustainability to ensure that Malaysia can finance the development expenditure and take care of its soon-greying population.

He said in fact, the fiscal reforms are required immediately and he had proposed the reimplementation of a consumption tax such as the GST to boost the country’s GDP growth.

Tengku Zafrul also claimed that the Pakatan Harapan government’s move to abolish GST and revert to Sales and Service Tax (SST) had caused the government to lose over RM20 billion in revenue.

“If you compare GST with SST, it is more or less the same when it comes to revenue collection function. But from a practical point of view, GST has a better mechanism to prevent fraud.” he said.

He then pointed out the tax revenue leakages due to tax evasion that SST has brought about, adding that the government now face difficulty in tracking the RM20 billion which was lost.

“That’s why we have to reconsider the GST because all other countries have already done so.” he said.

Meanwhile, he said it would be easy to implement the GST if everybody agrees with it. However, the challenge remains in the misinformation and political propaganda that cause people to reject it.

On the other hand, Tengku Zafrul said the government needs to consider whether 6% is reasonable if GST is being reimplemented.

He also said the government aims to achieve a 3 to 5% budget deficit by 2025 and the government need the extra revenue for national development. This development spending will then have a positive impact on the economy by creating jobs and so on.

Nonetheless, Tengku Zafrul believes that now is not the best time to reintroduce the GST. “It is easier for us to talk about this when the country’s economy is back on track, otherwise people’s acceptance will be low.”

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