Economist pushes for GST return, citing higher revenue potential

SHAH ALAM - An economist has argued that the Goods and Services Tax (GST) is a better fit for Malaysia compared to the Sales and Services Tax (SST) due to its potential for significantly increasing government revenue.

According to Universiti Kuala Lumpur economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid, SST has proven to cause a 51.6 per cent reduction in government tax revenue compared to GST, as the range of taxable goods under SST is smaller than that under GST.

He said that the implementation of GST could also help the government avoid the drastic targeting of RON95 petrol subsidies due to the increased revenue generated.

“The main reason for the lower SST collection is that the scope of SST is smaller, covering only 41 per cent of all goods and services sold in the market compared to 76 per cent under the GST scope.

“Because of this, GST is more suitable because it is a consumption tax where those who spend more due to higher income are appropriately taxed.

“For the B40 and M40 groups, the taxation is directly dependent on their income, which is lower, while essential goods like food, beverages, and fuel used by all layers of society should not be taxed,” he told Sinar when contacted.

According to Aimi, if the government wishes to reimplement GST, the rebate system needs to be more efficient, accurate, swift, and managed by government agencies handling the operations.

At the same time, he reminded the government not to repeat the shortcomings that led to the abolition of GST in 2018.

“Apart from that, the GST rate should not be too high, ideally starting at a low rate of two to three per cent.

“Many business associations also support the implementation of GST over SST because it is easier from a practical standpoint.

“To balance the reimplementation of GST with prudence and consideration for the public, it is appropriate to reduce the income tax for the M40 group as well,” he added.