The government is reviewing the feasibility of reintroducing the goods and services tax (GST) but the timing is not right because the country is in the middle of an economic crisis, says Finance Minister Tengku Zafrul Tengku Aziz.
Reviving the GST is probably on the mind of economic planners but Zafrul believes the people are not ready for the return of the unpopular tax.
The GST was implemented on April 1 by Najib Razak, an unpopular move that contributed to his electoral defeat at the hands of the Pakatan Harapan coalition. Removing the GST was part of the PH electoral campaign against Najib.
In 2018, the Harapan government with Tun Dr Mahathir Mohamad at the helm removed the GST and replaced it with a 6 per cent sales and service tax.
Speaking at the ST Connect webinar on Thursday (Sept 2), Zafrul says the government does not want to choke the already fragile growth prospects.
“GST, yes, this is a favourite question whenever I meet the analysts and economists, and it is also something that we in the Ministry of Finance are looking at.
“We are still reviewing the feasibility of re-introducing the GST but I firmly believe the timing is not right at this stage, not in the middle of an economic crisis and the middle of a pandemic, given that we do not want to choke the already fragile growth prospects,” says Zafrul.
The Finance Minister also says the dynamic COVID-19 situation has taught Malaysia to be cautious about “pulling support” for the economy too soon.
“We understand that the Covid-19 situation is dynamic. We didn’t realise in 2020 what will happen in 2021, and we hope that, with vaccination at least, we know that 2022 has to be, and can be and should be a recovery year. But the situation remains fluid and that’s why we have to plan and pace ourselves,” he says.