By Media Selangor Team
SHAH ALAM, Jan 23 — The government has no plans to reintroduce the Goods and Services Tax (GST) at the moment and will instead retain and improve the existing Sales and Service Tax (SST) structure.
While acknowledging the advantages of GST, the Finance Ministry (MOF) said the current economic conditions do not support its reintroduction.
“As previously explained by the Prime Minister (Datuk Seri Anwar Ibrahim), the government does not intend to implement GST at this time as current disposable income levels and the cost of living require careful consideration before implementing a more comprehensive consumption tax,” it said in a written parliamentary reply.
The ministry was responding to a question from Kubang Pasu MP Datuk Ku Abd Rahman Ku Ismail on whether the government intends to reintroduce the GST, amid views from financial experts that the tax regime is more effective at revenue collection than the SST.
GST was introduced in April 2015 at a rate of six per cent, generating more than RM40 billion annually, almost double the revenue from SST.
However, it was abolished in September 2018 following the change of federal government, amid public concerns over rising living costs, with SST making a return.
The MOF said while both GST and SST are consumption taxes, they differ significantly in scope, impact and implementation.
“GST is a taxation system that directly impacts buyers or recipients of services involving all segments of society, especially the B40 group.
“SST is a more targeted taxation system and has been used in Malaysia for more than 40 years. It is a system understood by industry, traders and the people. As such, the government has decided to continue with SST while making improvements.
“This is the government’s approach to maintaining a targeted consumption tax whereby basic goods and services commonly used by the majority of the people are generally not subject to tax.”
The MOF said the implementation of SST is also able to provide a faster fiscal impact to the government compared to GST, which requires a longer preparation period of up to two years to allow companies time to update their systems.
It added that the government remains committed to strengthening the country’s fiscal position while safeguarding public welfare.
