Govt not considering GST return while incomes are low, living costs high

KUALA LUMPUR: The Malaysian government is not planning to bring back the Goods and Services Tax (GST) while incomes remain low and living expenses are high, Finance Minister II Datuk Seri Amir Hamzah Azizan has stated. Instead, the government is concentrating on enhancing the Sales and Service Tax (SST), taking into account people's ability to pay and businesses' compliance costs.

The Finance Minister highlighted that GST tends to be regressive for low-income groups, who spend a larger portion of their income on goods and services. Under the proposed SST system, the government can choose what to tax, providing a more progressive and targeted approach. While part of the tax burden could be passed onto consumers through prices, the scope of SST could be tailored to consider people's ability to pay.

Additionally, nearly 700,000 businesses, or 90% of registered businesses, were under the GST in 2018, whereas only about 130,000 were under the SST in 2026, indicating a higher compliance burden for businesses under GST. Despite the GST's revenue potential, proposals to replace SST with GST would not necessarily yield additional revenue as it would merely shift the tax burden from the business sector, including exports, to individuals.