KUALA LUMPUR: The government must explain why it continues to reject the reintroduction of the goods and services tax (GST) when several of its key components are already being adopted under the sales and service tax (SST), says MCA president Datuk Seri Dr Wee Ka Siong.
Speaking during a special chambers session in the Dewan Rakyat on Thursday (Feb 12), Dr Wee said e-invoicing — a core feature of GST systems — is now being rolled out locally, noting that it is already practised in about 175 countries worldwide.
He also highlighted efficiency differences between GST and SST, warning that SST creates a cascading tax effect.
“In any textbook, you can read how SST leads to cascading. That’s why the price of something like a Roti John can go from RM5 to RM8,” he said.
Dr Wee further compared tax collections under both systems, saying about RM44bil was collected during the GST period in 2017, while SST revenue reached RM55.9bil last year.
He added that SST’s expanded scope now covers nearly the same areas as GST.
“So why not use a more transparent system instead?
“If we are already applying GST components under SST, why can’t we make the switch? The mechanisms required are already there,” he said.
Responding, Deputy Finance Minister Liew Chin Tong said rising prices were not unique to Malaysia, pointing to global supply chain disruptions and the Ukraine war between 2021 and 2022 as contributing factors.
“What we are experiencing now is the outcome of what happened then. Inflation is low today, but prices have gone up and may not come down,” he said.
Liew also said the e-invoicing rollout is being implemented in phases, with the government granting a 12-month transition period ending Dec 31 this year.
“During this period, businesses can issue consolidated e-invoices without penalties,” he added.
He cautioned that GST would place a heavier burden on lower-income groups.
“Companies favour GST because it is efficient for them. But the cost will eventually be passed on to consumers,” he said.
However, Liew did not rule out GST’s return entirely, saying it could be reconsidered once Malaysia’s median wage exceeds RM4,000.
“At present, the median wage is about RM2,800. If GST is introduced now, everyone will be affected.
“When we become a middle-class society, we can pursue GST,” he said.
GST was abolished after Pakatan Harapan won the 14th General Election in 2018. SST subsequently replaced it and was later reviewed and expanded, with revised rates taking effect on July 1 last year.
