If SST needs GST to fix it, just bring back GST, says DAP man

A DAP MP has suggested that instead of attempting to merge the sales and service tax (SST) with the goods and services tax (GST), the government should consider reviving the GST. Kepong MP Lim Lip Eng stated that the government should think seriously about reintroducing GST, a multi-stage consumption tax that was initially launched in April 2015 at 6% before being zero-rated in June 2018.

If the solution to SST's flaws lies in merging GST with SST, the government should also be ready to contemplate a well-designed GST with robust safeguards, quicker refunds, and aid for those with lower incomes, Lim said in a statement. Tax policy should be about what functions effectively, not merely what we name it. Create a straightforward GST, not a complex hybrid just to circumvent the GST label.

If GST proves more advantageous, bring it back properly. Most nations now employ GST, with at least 176 countries utilizing it. Malaysia is the sole country using the SST-GST hybrid being considered by the government at present. Lim, the Kuala Lumpur DAP secretary, emphasized that the government must present Malaysians with figures before introducing a new hybrid system.

He questioned how much of the projected RM59.6 billion SST revenue in 2026 would be claimed back by businesses, refunded, and the speed at which refunds would be issued. Lim also queried how much revenue the government would retain and which sectors would continue to face tax-on-tax. He stressed that these specifics are crucial as they will determine whether the new system is simpler, fairer, and more efficient than the existing one.

Prime Minister Anwar Ibrahim recently indicated that the government is open to exploring how elements of the GST could be incorporated into the current SST system, while retaining SST as the main tax structure but introducing GST-based modifications to establish a more progressive tax system.