Reinstating GST : A test of the Unity Government’s determination to initiate tax reforms

In recent days, numerous public figures have conveyed to the public that the government does not rule out reinstating the Goods and Services Tax (GST). They include Prime Minister Dato’ Seri Anwar Ibrahim, Economic Minister Rafizi Ramli, Deputy Minister of Finance Dato’ Seri Ahmad Maslan and others. Such remarks test the determination of the Unity Government to initiate reforms in the tax system.

Many tax experts and economists recognise the GST as a tax system that is transparent with fewer loopholes for tax dodgers. GST widens the country’s revenue collection, improves the tax and financial situation to a large extent and reduces Malaysia’s reliance on taxes from petroleum and commodities. The GST also undertakes a balancing mainstay role when international oil prices and economic crises strike. Therefore, major chambers of commerce, including the ACCCIM and the Federation of Malaysian Manufacturers, have publicly called on the government to re-introduce GST as soon as possible.

Whether the government should resume the GST is no longer an issue in the business community as the latter emphasises competitiveness and productivity. The implementation details that need to be discussed include whether the tax rate should be reduced to 4% from 6% as was the rate prior to the abolition of GST, and whether to implement accelerated tax rebates. An effective mechanism is needed to lighten the public’s cost of living burden and ease the pressure off cash flow operations of corporations.

The Pakatan Harapan government axed the GST as soon as it came into power in 2018 mainly due to political considerations for short-term electoral gain, rather than for the long-term interest of our country. It is now incumbent on the Unity Government to put things in order soonest possible and not scrap beneficial policies executed by political opponents from the predecessor government due to narrow political vengeance. If the Unity government is able to respond to public opinion and recommence the GST, this will demonstrate the Unity Government’s will and courage for reforms.

There is a saying that “politicians think of the next election; a statesman thinks of the next generation.” It will be a major decision to restart the GST, as this would indeed present the shared and common aims of the Unity Government’s leadership.

-MCA online-