CIVIL society groups are divided over talk of the government’s intent to reintroduce the unpopular Goods and Services Tax (GST).

While a major consumer group said it supported the idea, it also said the tax collection must be fair and affordable for the people.

Others said clearer information on the GST mechanism must be made available to everyone if the tax system makes a comeback. 

One political party however rejected the idea of bringing back GST, calling it a regressive tax system. 

On Thursday, Putrajaya said the government has not completely rejected the idea of bringing back GST, with Deputy Finance Minister Ahmad Maslan saying the government was evaluating the right time to reintroduce the tax system. 

Federation of Malaysian Consumers Associations said the idea to re-introduce the tax is good but the government must set up a strong enforcement so no one evades from paying tax.

Its chief executive officer Saravanan Thambirajah said the government must also ensure the tax rate is not too high. 

“We support the idea. It is a transparent tax system and it is widely used around the world. Just that we need to make sure the implementation and the tax rate is suitable. 

“The enforcement has to be strong too. Not just ordinary people, but those with higher income have to pay, they cannot escape. 

“GST can boost our GDP and can be enjoyed by the people,” he said.

For Ayob Abdul Majid of Ampang Small Traders and Hawkers Association, the government should implement the tax system if it brings more benefit to the public. 

He said he wouldn’t mind having the tax back but hoped for a lower rate. 

“For traders and hawkers like us, I think the impact is minimal but it would be good for everyone if the rate is lower than before. 

“I actually don’t mind (having GST back) as long as the tax system can lift our economy. I am aware our economy is not performing well now. This is the time to study and to look at the consequences,” he said. 

Teh Kee Sim, a former head of the small and medium enterprises (SMEs) association, said the government must be able to explain tax thoroughly to the public to prevent misconception. 

“Back then everyone was afraid of GST. There were many misconceptions and it created fear among the public, especially the low-income earners. 

“The government has to include every information about the tax to the public so there won’t be any misunderstanding. As a person in the SME industry, I personally know many people who were misinformed about GST years ago,” he said.

Try other forms

However, for Parti Sosialis Malaysia’s A. Sivarajan, the government must not backtrack on its commitment to abolish GST. 

Sivarajan said Malaysia could do more by implementing existing tax systems such as the windfall or inheritance tax.

“GST is not progressive. It is a regressive system. Under it, the manufacturers, then the wholesalers, and finally the retailers can reclaim the tax but not us consumers. Consumers cannot reclaim the tax. 

“From the day GST was introduced we have been against it. For us, leakages, by way of wastage and corrupt financial misdeeds, must be minimised, if not eliminated. 

“If we can guarantee no financial misdeeds, and the money goes to the right channel, we do not need GST,” he said. 

The Barisan Nasional government had, in 2015, introduced GST, evoking complaints that refunds were slow and had stifled business growth.  

On the consumer side, the 6% GST had also caused widespread anger among Malaysians and was one of the chief reasons voters had voted out the government in 2018. 

Pakatan Harapan, after coming into power in May 2018, removed the consumption tax and replaced it with the Sales and Services Tax.

In 2020, then prime minister Muhyiddin Yassin said his Perikatan Nasional government will look into all options to strike a good economic balance, including reintroducing GST.  

However, Prime Minister Anwar Ibrahim told Bloomberg he rejected the reinstatement of GST in the present, or any other move that could cause more hardship for the poor.   

He said his government would try to lower Malaysia’s huge debt and reduce the budget gap. – March 13, 2023.