KUALA LUMPUR: Prime Minister Datuk Seri Anwar Ibrahim has emphasised that the government’s position against reintroducing the Goods and Services Tax (GST) is not driven by political considerations, but by a commitment to ensure that the country’s taxation system does not burden the people, especially the low-income group.
Anwar, who is also Finance Minister, said reintroducing the GST while the public’s incomes remained low was not a viable option, as the tax was broad-based and could potentially increase the cost-of-living burden.
He said the government was, however, open to making adjustments to the existing Sales and Services Tax (SST) system, including addressing the double taxation issue raised by industry players, without having to revert to GST.
“I am not dogmatic when it comes to economics. The system remains SST, but if we can make one or two adjustments to improve it, why not?
“I am firmly against the GST. It’s not about politics. What is political about choosing what benefits the national economy and the people? GST is a tax imposed on everyone. The SST is a tax levied on businesses. I choose to tax businesses instead,” he said during the Minister’s Question Time (MQT) session at the Dewan Rakyat today.
The prime minister was replying to a supplementary question from Datuk Seri Dr Ronald Kiandee (PN-Beluran), who wanted to know whether the government’s reluctance to reintroduce GST stemmed from the political stance of leaders in the previous administration rather than economic considerations, including the issue of double taxation under SST.
Anwar said the main difference between the two tax systems was that GST was imposed broadly on consumers, while SST was more focused at the business level, although some of the tax burden could also be passed on to consumers.
He said the implementation of GST could only be considered when the people’s incomes reached a higher level – for instance, a minimum income of RM4,000 – to ensure that the tax did not place an excessive burden on low-income groups.
He added that current income levels remained low, while the government’s efforts to raise the minimum wage had also faced resistance from some business groups.
Meanwhile, Anwar revealed that many representatives of large businesses had suggested reintroducing GST during previous Budget dialogue sessions, but he expressed concern that the tax burden would ultimately be passed on to consumers.
“If you look at the discussions, all the tauke (big businessmen) and business owners want GST. They must a have a reason for wanting it. It is convenient for them. So, they can shift the tax burden, they do not have to bear it, but those further down the chain will have to. That is my major issue with it (and why I disagree).
“Do not burden the people, who are already having to deal with the cost of living and other problems. That is why I appeal to them to understand why the GST cannot be implemented at this time,” he added.
Replying to a supplementary question from Datuk Awang Hashim (PN-Pendang) on the effectiveness of GST compared with SST in managing taxation throughout the supply chain, the prime minister acknowledged that the SST system had weaknesses, including the possibility of traders taking advantage of the system to raise prices, making monitoring necessary to protect consumers.
Anwar said weaknesses in monitoring and enforcement were also among the government’s concerns over the reintroduction of GST, as it risked increasing the burden on consumers, especially those in lower-income groups.
