Malaysia eyes GST revival for fairer tax system
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- Anwar Ibrahim said on Aug 18 the government was considering reforming Malaysia's consumption tax regime to be more progressive and efficient, potentially reintroducing aspects of the goods and services tax (GST).
- Malaysia scrapped the 6% GST in 2018 amid public outcry over rising living costs, replacing it with the narrower sales and services tax (SST).
- Anwar, who also serves as finance minister, called GST the most transparent and efficient system of tax collection but flagged concern about its impact on the poorest segments of society.
- The Malaysian government said in 2024 it had no plans to reintroduce GST as an alternative to removing subsidies, a position it now appears to be revisiting.
- The finance ministry said targeted subsidies had generated around RM15.5 billion (S$4.88 billion) in annual savings, helping the budget absorb higher energy costs tied to the Middle East conflict.
- Malaysia is expected to present its 2027 budget in Parliament on Oct 9, framed around 10 focus areas including narrowing regional development gaps, easing cost-of-living pressures, and boosting investment growth.
Why it matters: Anwar's shift from the government's 2024 stance against GST signals a major fiscal recalibration as Malaysia looks to broaden its tax base ahead of the Oct 9 budget presentation. The RM15.5 billion in annual subsidy savings underscores the fiscal pressure pushing the rethink, while political sensitivity around cost-of-living impacts on the poorest remains the central obstacle.
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