31st January 2023 - 3 min read
Prime Minister Datuk Seri Anwar Ibrahim has said that he will not be reinstating the goods and services tax (GST) for now, or raising taxes that could impact the B40 group. This is even as the government strive to gradually lower Malaysia’s massive national debt and narrow the budget gap.
“I have a huge issue of having to introduce taxation policies or new initiatives when it affects the plight of the low-income group,” said Datuk Seri Anwar in a Bloomberg Television interview, although he acknowledged that the GST – which was replaced with the current sales and services tax (SST) in 2018 – is a more robust and transparent system for indirect tax.
The prime minister also added that the government “isn’t in a hurry to reinstate the tax”, and will make it a top priority to protect the low- and middle-income group from rising prices. That said, the government’s ongoing efforts at protecting the poor by keeping essentials at below-market prices is putting a strain on the country’s budget.
Notably, former Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had revealed before that the total amount of subsidies provided in 2022 to ease inflationary pressures on the people was forecasted to reach RM80 billion. This was up from the original allocation of RM31 billion, and was said to be “the highest amount of subsidies in history ever borne by any government”. Concessions on fuels and cooking gas alone were also said to make up about half of the RM80 billion subsidies.
In a bid to provide such assistances more effectively to the poor, the current government has recently decided to implement a targeted electricity subsidy between 1 January to 30 June 2023, where multinational companies and heavy users will need to pay a higher price for electricity. Domestic users, small and medium-sized enterprises (SMEs), and traders involved in agriculture and food production, on the other hand, will continue to pay the same amount as before.
Meanwhile, federal government debt has hit 61% of Malaysia’s gross domestic product (GDP), and must be addressed as soon as possible, said Datuk Seri Anwar. For context, Malaysia’s debt limit was originally set at 55% of the country’s GDP back in 2020, but it was temporarily raised to 60%, then 65% to allow additional borrowings to fund fiscal stimulus for the Covid-19 pandemic. This increased limit expired on 31 December 2022.
(Source: Free Malaysia Today)
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