Rafizi warns GST could increase burden on low-income households
He said households currently not paying income tax because their earnings fall below the taxable threshold would, for the first time, be taxed under GST.
"GST is a regressive tax because, in the end, it is ordinary people who pay," he said in the latest episode of the Yang Berhenti Menteri podcast.
The Pandan member of parliament said that under the current sales and service tax (SST), these households are spared such taxation, as some items are exempted.
The government has maintained that necessities will continue to be exempt under SST.
"But when GST is imposed, all daily essentials are taxed. That could mean RM1,000 to RM2,000 a year in new costs for families who have never paid any income tax before," he said, adding that the tax could also drive up prices.
Rafizi recalled the 2015 introduction of GST, which was followed by a noticeable price surge.
"If GST is six per cent, prices will go up by six or seven per cent.
"In Malaysia, once prices go up, they rarely come down," he said.
He urged the government to focus on keeping inflation around two per cent and implementing wage reforms before considering GST in the future.
As of June this year, the annual inflation rate stood at 1.1 per cent.
"This is not about politics.
"It's about maintaining price stability and giving enough runway for wage growth to outpace inflation," he said.
Rafizi had previously stated in 2023 that while GST was the most efficient tax to curb evasion, it would increase the financial burden on lower-income groups.
Last month, Finance Minister II Datuk Seri Amir Hamzah Azizan said the government had no plans to reintroduce GST for now, describing it as "impractical" under the current economic conditions.
He acknowledged the merits of the system but said it was "not suitable for now."
In June, Prime Minister Datuk Seri Anwar Ibrahim said GST would only be considered once the economy improves and the minimum wage reaches RM4,000 or more.
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