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SHAH ALAM - The government should reopen discussions on the Goods and Services Tax (GST) without being held back by the political baggage surrounding its previous implementation, said Petaling Jaya MP Lee Chean Chung.
Lee, who is also a PKR lawmaker and member of the Parliamentary Special Select Committee on Finance and Economy, said the debate should focus on which tax mechanism would provide a more predictable and efficient system for businesses, particularly small and medium enterprises (SMEs), rather than whether GST or the Sales and Services Tax (SST) was politically popular.
He stressed that GST and SST operated under fundamentally different systems and should not simply be viewed as interchangeable taxes.
“We shouldn’t demonise one tax regime. Maybe a tax regime that was not suitable 10 years ago, around 2018, why don’t we relook at it?” he said during Sinar Daily's Top News podcast session titled 'Time to Fix the System'.
Lee said the discussion should be approached rationally, particularly given the difficulties faced by businesses under the current SST regime.
He said while no business welcomed taxation, GST provided a structured, multi-tier collection mechanism involving input tax credits and refunds.
Such a mechanism, he said, could also support Malaysia’s export competitiveness by preventing tax costs from being embedded throughout the supply chain and ultimately passed on to consumers overseas.
Lee said the government should therefore consider a framework – whether called GST, VAT or another form of multi-tier taxation – that makes compliance easier for smaller businesses.
“It’s actually just multi-tier or single-tier tax collection mechanism. We need to look at it to facilitate, really to make especially small businesses’ life easier,” he said.
His comments come amid continuing debate over the future of Malaysia’s consumption tax system, with businesses facing changes to the scope and administration of SST.
Lee criticised what he described as uncertainty created by frequent amendments and new guidelines, saying businesses could not reasonably be expected to constantly retrain administrative staff to keep pace with changes.
“You don’t expect to send your admin for training every three months. That’s cost. That’s business cost,” he said.
He also highlighted unexpected costs faced by businesses, citing mall tenants who were already subject to 8% SST on rental payments and were subsequently affected by the treatment of electricity and water charges paid to master mall operators.
“These out-of-budget shocks would actually make our retail businesses have a very pessimistic view on their prospects,” he said.
Lee also raised concerns over the treatment of contract workers under Section 12B of the Services Tax Act, claiming manpower agencies could face SST on items including Employees Provident Fund (EPF) and Social Security Organisation (Socso) contributions and mileage claims.
He cited a large logistics delivery company employing tens of thousands of workers which, according to him, was facing an additional RM2 million to RM3 million in SST each month.
Lee warned that the additional costs could eventually affect workers if companies responded by reducing increments or limiting claims.
He further criticised the administration of SST, including the online interface used by businesses to make tax payments, describing it as not user-friendly and in a “dire state”.
More fundamentally, Lee said the current approach appeared reactive, with new measures introduced whenever authorities identified loopholes or additional areas from which revenue could be collected.
He argued that businesses instead needed a clear roadmap so they could plan and absorb changes.
“If you’re telling people, first year I’m going to do this, third year I’m going to do this – there should be a timeline and certainty,” he said, stressing that his views did not represent the official position of PKR.
“I can only represent my own voice. I don’t think the party wanted me to represent the party. I can’t represent the party,” he added.
However, he said his experience engaging with SMEs had convinced him that the country’s tax regime warranted a serious reassessment.
While headline economic indicators could show strong GDP growth, he said many small businesses and ordinary Malaysians did not necessarily feel the benefits.
“GDP seems to be doing well but the general public don’t feel it,” he said.
Lee said the debate should therefore move beyond a simplistic choice between restoring GST or retaining SST, and instead focus on whether Malaysia could build a tax system that was easier to administer and supported long-term business growth.
He added that he was prepared to contribute to a wider discussion on the issue, including alongside those already advocating a return to GST.
“I wish to unpack a lot more things, not just about voting yes or no,” he said.