MCA: If GST is more efficient, Putrajaya should bring it back

 

AN MCA leader has urged the government to reconsider the Goods and Services Tax (GST), saying Prime Minister Datuk Seri Anwar Ibrahim’s acknowledgement of its efficiency should prompt Putrajaya to revisit the consumption tax.

The party’s vice president Datuk Seri Dr Wee Jeck Seng said the government should have the courage to reinstate GST rather than continue modifying the Sales and Service Tax (SST) framework.

On Monday (Aug 18) Anwar, who is also Finance Minister, has acknowledged that GST is an efficient and transparent tax system but has maintained that the government is not ready to reintroduce it because of concerns over the impact on lower-income Malaysians and the cost of living.

In June 2025, Anwar said GST was among the more efficient and transparent taxation systems but explained that he had opposed its immediate reintroduction because Malaysians’ income levels were still too low.

He further noted that the government would consider a more comprehensive consumption tax when incomes had risen.

In July this year, the government again ruled out reinstating GST for now, saying SST was more targeted and could provide fiscal benefits more quickly. Anwar said GST would affect all Malaysians, including those in the B40 group, while SST was more targeted.

“Since the Prime Minister himself has acknowledged that GST has higher tax collection efficiency, the government should have the courage to reinstate it instead of continuing to patch up the existing SST system,” Wee stated.

The Tanjung Piai MP said retaining SST while incorporating selected features of GST could create further uncertainty for businesses and consumers because the two systems operated differently.

“A country’s tax system cannot be patched up every time a problem is identified. Forcing certain elements of GST into the SST system will ultimately create greater policy uncertainty,” he stressed.

“Businesses will not know what they will have to deal with next, while consumers will not have a clear understanding of how much tax they are actually bearing.”

Wee pointed out that combining elements of two fundamentally different consumption-tax systems could create additional complexity, even if the government succeeded in increasing revenue.

GST was introduced in Malaysia at a rate of 6% in April 2015 before being abolished in September 2018 and replaced by SST.

Under the current system, sales tax is generally imposed at a single stage on taxable goods, while service tax applies to specified taxable services.

The government subsequently expanded the scope of SST from July 2025 as part of efforts to broaden the tax base and strengthen revenue collection.

Official figures showed federal revenue increased in 2025, with the Finance Ministry attributing the improvement partly to the expanded SST and stronger tax compliance.

Wee, however, argued that the changes had increased costs for businesses and contributed to higher prices for consumers.

“GST is widely recognised internationally as a fair, transparent and efficient tax system. MCA, together with the domestic business community, academics and experts, has repeatedly called for its reinstatement,” he remarked.

He said the government should consider bringing back GST at a lower initial rate, such as 4% or less, while providing broader exemptions for essential goods and services.

“Businesses and the people should also be given sufficient time to adapt to the new system,” he added.

According to Wee, a properly designed GST could provide the government with a broader and more predictable revenue base while improving transparency in the tax system.

“The question is no longer whether the merits of GST are recognised. The Prime Minister has already acknowledged them. The question is whether the government is prepared to act on that recognition,” he said. ‒  Focus Malaysia