Moody's sees measures to recover revenue from GST removal crucial

Lim Guan Eng explained that STT would be a

KUALA LUMPUR: Moody's Investors Service views the government's move to abolish the goods and services tax (GST) should be offset by other measures to help recover the loss from the revenue from the GST.

Its vice president and senior analyst, sovereign risk group Anushka Shah cautioned that the GST, if removed  without adjusting measures, would be credit negative. 

“While revenue losses this year will be offset to some degree by higher oil prices, this development is unlikely to be a structural -- or act as -- a permanent substitute for GST itself,” he said on Thursday. 

“The extent to which offsetting measures, if any, will help recover the revenue loss from GST will allow us to determine the exact impact on Malaysia’s fiscal position going forward. 

“However, if GST is eliminated, it would increase the government’s reliance on oil-related revenues and would also narrow the tax base,”  he said.