No plans to reintroduce GST, says Amir Hamzah

KUALA LUMPUR: There are no plans to reintroduce the Goods and Services Tax (GST) because it is a form of broad-based consumption tax that could burden Malaysians at the lower-income group, said Finance Minister II Datuk Seri Amir Hamzah Azizan (pic).

“It is a form of broad-based consumption tax and therefore, it isn’t a suitable time to reintroduce it, as Malaysians, especially those with low-income, are facing cost of living challenges,” said Amir during Prime Minister Question Time (PMQT) in Parliament on Tuesday (March 5).

Amir Hamzah said that even though the inflation rate for 2023 was an average of 2.5%, he said the inflation rate for food and beverages was at 5%.

“This category (food and beverages inflation) is felt most by the people.

“This is among the reasons why the sales and services tax (SST) was kept at 6% for food and beverages,” he added.

Amir Hamzah was responding to a supplementary question raised by Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal (PN-Bukit Gantang), who asked whether the government would reintroduce the GST.

Earlier, Amir Hamzah said that in order to increase the government’s fiscal space, it is crucial to plug leakages through targeted subsidies and broadening the tax base.

He noted Malaysia’s low tax base rate at 11.2% of its gross domestic product (GDP), compared to Singapore’s 12.6%.

“Tax reforms are needed, but the government will take appropriate steps to ensure that the people are not burdened and the fiscal space remains sustainable,” he said.

Amir Hamzah also said that following the implementation of new taxes, the government is monitoring prices of goods beginning March 1 this year.

“The government will not hesitate to take stern action if there are any traders who increased their prices errantly,” he added.

Responding to Rodziah Ismail (PH-Ampang), Amir Hamzah said the government is committed to strengthening its financial position.

“The government is also open to studying taxes that could increase revenue without having far-reaching impacts,” he added.

Meanwhile, Amir Hamzah said that to increase national revenue, the government took gradual steps by broadening the tax base to those who are more capable.

As an example, Amir Hamzah said the 2 percentage point increase in SST for electricity tariffs was implemented for commercial users consuming over 600 kilowatts an hour.

“This is 15% of the biggest users and for the remaining 85%, there will be no taxes in their bills. At the same time, water is also excluded from the SST,” added Amir.

Effective March 1, 2024, the service tax in Malaysia will be revised to 8% from 6%.

However, Putrajaya had said the new tax rate for services widely used by Malaysians such as food and beverage, telecommunications and parking, remains unchanged at 6%.