REINTRODUCTION OF GST?
Mr Anwar also said that measures would be taken to expand the tax base, diversify tax sources and improve the administration of taxation through the use of technology.
He, however, claimed that the government serves the people and it would “never” burden them with taxes that were beyond their means.
“The principle we adopt is fair economic equality for the well-being of all people,” he said, without giving more details.
Mr Rafizi, the economic affairs minister, said on Monday that the government is open to reintroducing GST to expand the tax revenue base to achieve fiscal sustainability.
He said that while there were no immediate plans for the GST for now, the government is focused on developing and rolling out the capital gains tax next year.
“We’re willing to explore different methods to achieve this fiscal sustainability through a wider revenue base,” he was quoted as saying by news portal Malaysiakini.
The capital gains tax is a tax on the profit that an investor makes when they sell an investment such as stocks, bonds, and real estate.
In tabling Malaysia’s 2023 budget, Mr Anwar had said that the government was studying how to introduce a capital gains tax for unlisted share disposal by companies.
Mr Anwar then later said that the tax would not be introduced on listed shares while the disposal of unlisted shares for an approved initial public offering would also not be subject to the tax.
Separately, political analyst Dr Sivamurugan Pandian of Universiti Sains Malaysia (USM) said that the GST issue for one had been manipulated by the then-opposition during the 2018 elections and was one of the reasons that led to the downfall of the Barisan Nasional government led by Najib Razak at the time.
“It was easily manipulated by the opposition, some of whom are in the government now. It is a high risk undertaking politically but I think these are rational measures to ensure we remain competitive regionally and globally,” he told CNA.
The GST was first introduced in April 2015 during the administration of Najib Razak at a rate of 6 per cent, although the tax was not imposed on several things such as basic food items, agricultural products, water, fuel and several services.
When Pakatan Harapan won the elections in May 2018, the GST was removed and replaced with the Sales and Services Tax (SST) three months later.
Many economists consider GST – a consumption based tax – to be the most transparent tax system and broadens the tax base as compared to the SST, which brings in less revenue.
Mr Ahmad Maslan had told parliament in March that the average annual amount collected under SST was RM25 billion, while the government could collect RM50 billion should the GST be implemented.
Dr Jeniri said it would be very challenging for the current Malaysian government to reintroduce the GST and they would have to swallow its pride if it decided to do so.
“I don’t think it will be easy for people to accept it now. That is the problem with political leaders who use populism to win votes. They rejected the GST before so how are they going to explain any decision to reimplement it,” he said.
Both Dr Jeniri and Dr Sivamurugan, however, said that while the measures were set to be unpopular, they were needed for the long-term benefit of the country.
“At the bottom line, they have to explain all these moves to the people properly. The GST was considered to be a solid initiative and any future political leaders should think carefully before they change policies which are good for the country overnight,” said Dr Jeniri.
“These measures are needed to overcome the economic challenges now but before you implement them you have to make sure that the masses understand why these measures are necessary and that it doesn’t backfire on the government,” said Dr Sivamurugan.
Source: CNA
