Prime minister Datuk Seri Anwar Ibrahim has reiterated that Malaysia will not reinstate the goods and services tax (GST) or any other broad-based consumption tax, at least not in the near future. Having stated last month that there were no plans to bring it back, he said that the country was not ready for the reintroduction of GST, the New Straits Times reports.

“I have previously stressed that in terms of the efficiency and a transparent taxation system, we are not ready for another implementation of GST. The people’s income is still very low. Hence, we will not be able to reinstate GST in the coming six to 12 months,” he said.

Speaking during the minister’s question time in Dewan Rakyat yesterday, he said that the rakyat‘s income must first be increased and at a reasonable level for GST to be reinstated. He said that while countries like Singapore, Canada and New Zealand used that taxation systems, Malaysia was still far behind in terms of meeting the minimum income for GST to be reintroduced.

“Their people have the minimum income for the GST (and) if we compare, we have about 130,000 hardcore poor and poor income families from the B40 categories. Hence, this cannot be done now,” he said in reply to a supplementary question from Datuk Dr Zulkafperi Hanapi (PN-Tanjong Karang), who asked if the government had plans to reinstate GST.

“The capital gains tax and luxury goods tax that we recently introduced is more than enough for the country to gain extra income, aside from strict enforcement on tax evasion,” he said.

Talk of Malaysia reintroducing GST surfaced last year when previous prime minister Datuk Seri Ismail Sabri Yaakob suggested it in an exclusive interview with Nikkei. “We lost RM20 billion in annual revenue when we abolished the GST and replaced it with the old SST. No other country in the world has reverted back from GST to SST, except for Malaysia,” he told the publication at the time.

The GST replaced the sales and service tax (SST) in April 2015, but was then scrapped in favour of bringing back SST in September 2018 when the Pakatan Harapan government took over the reins. We’ve covered the impact of GST on the automotive industry and car prices in the past, which is worth a read to understand the mechanics of both taxation systems.