THE reinstatement of the Goods and Services Tax (GST) has been ruled out for now as it requires a preparation period of up to two years to allow firms to update their systems, the House heard.
Prime Minister Datuk Seri Anwar Ibrahim said the government will instead retain the current Sales and Service Tax (SST) framework as this targeted tax regime shielded most Malaysians from a broader tax burden.
He said the SST delivered fiscal benefits more quickly and the approach allowed consumption taxes to remain targeted.
“Both the GST and SST are forms of consumption tax.
“However, the implementation of GST has a direct impact on all Malaysians, including those in the B40 income group, whereas SST is more a targeted tax system that has been used in Malaysia for over 40 years and well understood by industry, businesses and the public.
“The government recognises the merits of GST. However, it does not consider this to be the right time to reintroduce the tax, given current income levels and the cost-of-living challenges faced by Malaysians,” he said in a written parliamentary reply to Datuk Seri Dr Wee Ka Siong (BN-Ayer Hitam) who asked about the government’s strategy in addressing the fiscal trap with subsidy costs no longer sustainable.
Dr Wee also asked whether Putrajaya would reconsider reintroducing the GST as a structural revenue mechanism in place of the multi-layered SST framework.
To accommodate the increase in subsidy expenditure arising from the global supply crisis, Anwar said the government reprioritised its annual spending, focusing on programmes that delivered the greatest benefits to the people and economy.
At the same time, he said the government strengthened fiscal discipline through tighter control of operating expenditure.
“These efforts enable us to maintain various assistance and social protection programmes, including cash aid, cost-of-living assistance and subsidies for essential goods and services.
“Our priority is to ensure that Malaysians continue to be protected should the current crisis persist, particularly those most affected by rising living costs and global price increases,” he said.
