THE Goods and Services Tax (GST) should be reinstated as it is a far more efficient, transparent and fair tax regime compared to the Sales and Service Tax (SST), Bera MP Ismail Sabri Yaakob said.

The former prime minister said after the GST was abolished, the country lost RM20 billion to RM30 billion in revenue annually to the black economy as those who do not pay taxes are not being monitored.

Ismail said it is better to have a more efficient tax system instead of increasing the SST rate from 6% to 8%.

“Although the increase does not cover food and beverages, it is understood that the move will have a chain effect on aspects that will drive up the prices of basic necessities.

“This is because businesses will not absorb the increased tax and production cost,” he said during the Supply Bill 2024 debate in the Dewan Rakyat today.

Malaysia implemented the GST, a multi-stage consumption tax, at a standard rate of 6% in April 2015 to replace the SST, a single-stage tax that was introduced in 1972. The SST was reintroduced effective September 1, 2018, to replace the GST.

In its 2024 Fiscal Outlook and Federal Government Revenue Estimates report, the Finance Ministry (MOF) said the choice between the SST and GST hinges on Malaysia’s economic goals, administrative capabilities and the need to achieve an optimal balance between revenue generation and the promotion of fairness and equity among the people.

The ministry said the SST, characterised by its narrower scope that concentrates on specific goods and services, serves as a subtle strategy in consumption tax.

The MOF said the GST, meanwhile, can potentially generate more revenue because of its broad-base feature and is more transparent to consumers as it is explicitly shown in the final price of goods and services. It can also reduce the size of the shadow economy. – Bernama, October 24, 2023.