[UPDATED] Anwar: GST on hold as Malaysians still can't afford it

New Straits Times

6 hours ago

PUTRAJAYA: The government will not reintroduce the Goods and Services Tax (GST) for now, as the income threshold of many Malaysians remains too low, Prime Minister Datuk Seri Anwar Ibrahim said.
Anwar, who is also Finance Minister, said that while GST is an efficient and transparent tax system, it would be inappropriate to implement it when lower‑income groups — especially those earning around RM2,000 — are not yet in a position to bear the burden.
"When I was Finance Minister, I remember saying in Parliament that GST is one of the most efficient and transparent tax systems. However, I had to postpone its implementation because the income threshold of the people at the time was too low.
"Although some might consider it a fair approach, many low‑income earners would still be impacted despite certain exemptions.
"Even if we exempt essentials such as rice and sugar, these same people still have to spend on other goods and services, including transportation. GST affects every part of their daily lives," he said during the Finance Ministry's monthly assembly here today.
He added that GST would only be reconsidered when salaries have risen closer to a more sustainable level, citing RM4,000 as a potential threshold for the future.
"Let people's incomes rise first. Perhaps when the minimum wage is RM4,000, we can consider it. At the moment, many are earning RM1,700 or RM2,000.
"Maybe I am not making the wisest decision, but my intention is simple — I do not want to introduce a tax that will burden the people prematurely.
"Until incomes rise, it would not be right for the government to impose a tax that adds to the people's struggles. Let incomes grow first — then, perhaps, GST can be revisited," he said.
The government had earlier announced a targeted review of sales tax rates and an expansion of the scope of the Sales and Services Tax (SST), which will take effect from July 1.
The sales tax rate will remain unchanged for essential goods, while a rate of five or ten per cent will apply to non‑essential goods or at the government's discretion.
Anwar added that if any party had better suggestions for tax implementation, these could be discussed openly, but he urged critics to refrain from disparaging the existing SST, which he said was introduced progressively.
For example, he said, the decision to impose tax on imported fruit — which has become a controversial issue — in fact provides an opportunity for local farmers to produce more fruit domestically.
"During my official trips to countries such as Laos, Vietnam and Thailand, I have never been served imported products at formal state events. They ensure that only local produce is served."
He said beyond tax policies, the government must also focus on supporting local farmers, entrepreneurs and suppliers.
"We have issued a directive for all departments and ministries to prioritise local produce and reduce reliance on imports.
"Why import expensive items like codfish when we have quality local fish such as keli (catfish)? Let us use government procurement to benefit our own farmers and fishermen."