PM Anwar: The Malaysian Government Will Not Restore GST

Prime Minister Datuk Seri Anwar Ibrahim recently stated in parliament that Malaysia had no plans to restore the Goods and Service Tax (GST) or any broad-based consumption tax.

He cites this as a means to reduce the country’s debt and will instead tighten subsidies enjoyed by T20 categories as what has been done with the electricity subsidies. Meanwhile, the government’s debt and liabilities currently stands at RM1.5 trillion, or about 82% of GDP.

Datuk Seri Anwar adds that the government's efforts are now focused towards restoring good governance and rectifying the past administration’s poor financial management and leakages, which led to an increase in the country's debt.

"As I explained in the previous session, although it was a decision made by the previous government to increase electrify tariff, the government has now withdrawn the suggestion and will only impose it on the T20 (top 20 income group) that are multinational corporations (MNC) and other big companies, unless they are involved in food security," Anwar told the Dewan Rakyat during the Prime Minister's Question time.

Leading on to that, Senior Lecturer at the Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Dr Jerome Kueh told Borneo Post that although it may affect the T20, the group can accommodate to the system as the impact will be minimal for them.

The case will be different for the B40 group if the subsidies do not reach them as the group has less flexibility to adapt,” he continued further.

According to Kueh, prioritising the portion of society that can get the most from the government subsidies is imperative as given the current situation and the tight fiscal position. In this case, targeted subsidies can be the way to overcome this issue and tighten the subsidies for the rich group of people.

However, the subsidies system will suffer leakage if the subsidies do not reach the relevant group of the people, or in other words, it will not be effective to assist the B40 group.

Kueh then noted that targeted subsidies necessitate careful planning and implementation to ensure that those who truly deserve the subsidy receive it, and that there will be a positive ripple effect if it is carried out effectively, particularly to protect people's welfare.

In short, with the PM’s decree to not reinstate the GST scheme, car prices in the country should remain as it is. Presently, all cars sold in Malaysia see a 10% Sales Tax (SST) applied after the initial government-approved selling price. That plus margins factored in then form the nett selling price  - excluding on-road costs, handling and inspection fees, and insurance.