KUALA LUMPUR: The Finance Ministry has ruled out reintroducing the Goods and Services Tax (GST) or implementing a GST-style consumption tax for now, citing the relatively low household income of most Malaysians.
In a written parliamentary reply on Thursday (Nov 12), the ministry stated that the existing Sales and Service Tax (SST) remains sufficient and will instead be refined periodically to meet industry needs.
Responding to Hassan Abdul Karim (PH-Pasir Gudang), who asked about proposals for a hybrid SST-GST system, the ministry noted that while it recognises the advantages of the GST, any tax framework must align with the public’s ability to pay.
"GST also tends to be regressive as lower-income groups spend a larger proportion of their income on consumption. Although the tax rate is the same, the relative burden can be heavier for poorer households," the ministry said, adding that potential revenue gains must be weighed against the financial impact on citizens.
Unlike the GST, the ministry explained, the SST mechanism does not automatically pass the tax burden onto end consumers, giving businesses the flexibility to absorb part of the cost rather than transfer it to buyers.
The ministry maintained that the current framework already incorporates strengths from both systems, aiming to minimise tax cascading while balancing public and industry interests.
Previously, Prime Minister Datuk Seri Anwar Ibrahim said the government is open to incorporating certain GST elements into the SST as part of efforts to develop a more progressive tax system.
“We are open to studying ways to improve the tax system. But if we are talking about GST alone, my concern, as I have said repeatedly, is that it would mean taxing the people,” said Anwar, who is also the Finance Minister.
