- The Malaysian government is considering reintroducing the goods and services tax (GST) to address the budget deficit and high public debt.
- GST is seen as an efficient tax system because it broadens the tax base and encourages savings and investment.
- Even if GST is imposed on 50% of consumption at a 6% rate, it could generate RM45 billion annually and halve the budget deficit.
- However, there are downsides to GST, including its regressive nature and the need for sustained economic growth before implementation.
- To navigate these pitfalls, the government should wait for robust economic recovery, start with a small tax rate, and ensure transparency and accountability in public finances.
- The public’s confidence in the GST as a tool of fiscal consolidation must be maintained.
Source: nst.com.my
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
