KUALA LUMPUR: The government will retain the Sales and Services Tax (SST) as Malaysia's tax framework, with Prime Minister Datuk Seri Anwar Ibrahim saying the reintroduction of the Goods and Services Tax (GST) would risk placing a broader tax burden on the public, including lower-income households.
Anwar, who is also Finance Minister, said GST was a broad-based tax that affected consumers across income groups, whereas SST was more focused on businesses, although some of its costs were passed on to consumers.
He said the MADANI government's decision to maintain SST was based on concerns over the cost of living and the need to protect households from additional financial pressure.
"In principle, SST is a tax on businesses, although a small portion of it is passed on to consumers. That is true. But GST is comprehensive. So, I do not understand why those claiming to champion the people want to impose a tax on everyone,” he said during Ministerial Question Time in the Dewan Rakyat.
Anwar said approximately 2,000 categories of goods and services were exempted from SST, compared with fewer than 750 under GST.
He also challenged arguments that bringing back GST would necessarily increase government revenue, noting that SST collections currently represented 3.2% of gross domestic product (GDP), matching the proportion contributed by GST in 2017.
The government was, however, open to refining SST to address shortcomings, including instances of double taxation, without abandoning the existing framework.
"Where there are specific cases involving double taxation, we can make adjustments. I am not dogmatic about economics.
"The system will remain SST, but with some adjustments to improve it. Why not?” he said.
On the possibility of revisiting GST, Anwar said such a move should only be considered once the people's minimum income had increased to at least RM4,000.
He said the government's priority remained addressing the cost-of-living pressures faced by households, adding that a broad-based tax would be inappropriate while incomes remained below what he considered a reasonable level.
"The government believes that the cost of living remains a burden on the people, and as long as their incomes have not reached a reasonable level, it would not be appropriate to reintroduce GST,” he said.