Anwar rules out full GST return, citing cost-of-living concerns

Prime Minister Anwar Ibrahim has expressed his reservations about adopting the Goods and Services Tax (GST) as Malaysia's primary tax source, citing concerns over its impact on low-income citizens. During a recent interview with local media, Anwar reiterated that any tax reform must adhere to the government's commitment to social equity.

While acknowledging the potential need for adjustments in the implementation of Sales and Services Tax (SST) or specific components of GST, Anwar firmly stated that "the core principle of this government is not to increase taxes for the very poor, therefore GST as a principle cannot be considered."

The prime minister's stance on this matter comes amidst ongoing technical assessments of a potential hybrid taxation system that combines elements of the existing SST with the GST to create a more efficient yet compassionate revenue stream. The Ministry of Finance has tasked Finance Minister II, Amir Hamzah Azizan, with leading the feasibility study of this hybrid model.

Malaysia's consumption tax debate has been a contentious political issue for over a decade. The GST was initially introduced at a 6% rate in April 2015 under the previous administration of Prime Minister Najib Razak. However, the Pakatan Harapan federal government abolished the levy in September 2018 and reverted to the SST model. Discussions about reintroducing the GST have resurfaced in recent times, aiming to broaden the country's tax base to increase revenue and address fiscal shortfalls.