KUALA LUMPUR – The government is open to reinstating the Goods and Services Tax (GST), such as the one implemented in 2015 during Barisan Nasional’s (BN) administration.
However, this decision must consider various factors, including governance issues and fairness for the people, said Rafizi Ramli.
The economy minister said the decision also hinges on the income status of housing issues, particularly for the poor, to ensure they are not unduly burdened by the taxation system.
Rafizi explained that when GST was introduced in 2015, the country faced governance problems, leading to unfair distribution as the burden fell on ordinary and low-income families.
“We need to academically evaluate GST’s effectiveness based on a country’s position and level of development,” he said.
“Developed countries with organised formal sectors use GST effectively, while less mature economies with citizens unable to pay traditional taxes might implement GST to ensure a fair tax burden.”
Rafizi shared his views during the first episode of his ‘Yang Bakar Menteri’ podcast with Nazri Hamdan.
Nazri is a staunch critic of the country’s economic system, and had previously taken aim at Rafizi on social media platform X.
Rafizi highlighted Malaysia’s challenge in 2015, with 40% of the population in the informal sector not yet eligible to pay taxes.
“Was it fair to implement GST when the majority could not afford it? Faced with the 1MDB problem, we also had to settle the 1MDB debt. Implementing GST transferred the tax burden to families not eligible to pay taxes,” he explained.
Rafizi noted that in order for the government to reintroduce GST, it must thoroughly examine whether it is the sole method to strengthen the country’s fiscal position.
“When we say we are open to re-implementing GST, we will be guided by principles. We will strive to avoid burdening every citizen. If necessary, we will prioritise imposing taxes on the rich and high-profit companies,” he said.
“The delay in GST reinstatement is due to exploring alternative methods to bolster the country’s fiscal position without causing injustice to the people.” – January 8, 2024