Malaysians hope new GST will be lower than 6%

Prime Minister Datuk Seri Ismail Sabri Yaakob previously said the government is aware of GST’s unpopularity but has limited options.


June 3, 2022

PETALING JAYA : While businesses laud the plan to reintroduce the goods and services tax (GST) to support a stronger economic revival, Malaysians are hoping for a lower rate than the previous 6%.

SME (small and medium enterprises) Association of Malaysia president Ding Hong Sing said GST is a fairer tax collection mechanism than sales and service tax (SST).

“GST is a consumption tax, so the more you buy, the more you pay. So you can’t escape from paying it.

“Meanwhile, SST created loopholes for some people to avoid paying their tax reimbursement.

“Many countries have implemented GST or a similar form of it and have succeeded in the tax collection process,” he said.

Ding said the government spent a lot of money during the Covid-19 pandemic, and thus, reintroducing GST would be a good move to replenish the national coffers.

“I would suggest the government introduce GST at a rate of 4% so as not to burden the people,” he said.

While countries around the world, including Malaysia, are facing global inflation, Ding said the prices of goods and services and commodities are bound to be pushed up, even without GST.

This is because disruptions to global supply chains coupled with higher raw material prices, freight charges, labour and transportation costs are driving up business costs.

Federation of Malaysian Con-sumers Associations (Fomca) chief executive officer T. Saravanan said GST is a good and fair system.

“Its implementation was effective when introduced in 2015.

“If the government reintroduces GST, it must follow what has been done before, whereby certain goods such as basic foodstuffs and medicines were zero-rated.

“If this is followed, then the re-imposition of GST would not be burdensome to the people.

“The government has to also look at whether it wants to set GST at 6% or lower this time around, but the rate must not further burden the people.

“The government must also think about how to improve its implementation this time around, keeping in mind many businesses are still trying to find their footing post-Covid-19,” he said.

Separately, Malaysians hope the new GST will be lower than the 6% implemented on April 1, 2015, but abolished in 2018.

Engineer Mohd Salihin Annuar, 38, said reintroducing GST would discourage consumption.

“If GST is only implemented for non-essential goods and luxury items, then it could help Malaysians save.

“But if the tax is imposed on essential goods such as rice, then it would burden Malaysians, especially low-income earners.

“Already the prices of goods and services everywhere are increasing after the pandemic, and we’re in the middle of a global inflation.

“If we have to pay GST on top of the base price for goods and services, this would stiffen our spending habits.

“But if a multilayered implementation of GST can be introduced, for example, 0% for basic goods such as rice and 6% for luxury goods, it could work.

“My only appeal to the government is to please not force us to pay GST for basic daily commodities,” he said.

Housewife Nur Raihan Mohd Rafi, 42, hopes the government will not bring back GST, saying that many families like hers are already living from hand to mouth.

“We can barely afford fresh groceries like chicken, rice and oil.

“We have to buy in small quantities every week because my husband is a labourer and gets paid daily. So we have no choice but to buy a little bit each time.

“That means if GST is imposed on groceries, we would be spending a chunk of our household income on the tax as we buy groceries often and in small quantities each time,” she said.

Nur Raihan, a part-time home-based dessert business operator, said this is also not the best time to reintroduce the tax as the country is only just starting to recover from Covid-19.

“It’s too soon. Maybe the Prime Minister should wait until things are better in the future,” she said.

On Tuesday, Prime Minister Datuk Seri Ismail Sabri Yaakob told the Nikkei Asia newspaper in Tokyo that the government is keen on reintroducing GST.

He said the government is aware of GST’s unpopularity but has limited options; he also noted that it had lost RM20bil in annual revenue after the then Pakatan Harapan government abolished the tax in 2018.

“The government would target a GST rate that does not burden the people but is not so low that it defeats the purpose of expanding tax revenue,” he said.

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