GST will only be reintroduced in Malaysia when the minimum wage threshold reaches RM3,000 – Anwar

The government says it has no plans to reintroduce the goods and services tax (GST) in Malaysia, not just in the immediate future but until the country is ready for it, when the minimum monthly wage has doubled from the RM1,500 it is at now.

According to prime minister Datuk Seri Anwar Ibrahim, the GST will only be reimplemented if the minimum wage threshold is at RM3,000-RM4,000, as Bernama reports. While acknowledging that the tax system is efficient and would help the government expand its coffers with higher revenue collection, he said the poor should not be burdened with such a tax system.

“I agree, GST is the most transparent and efficient tax system, but my view is, give it some time, some years, (we must) make sure that the wage threshold increases to the minimum of RM3,000-RM4,000, then we can adjust the policy,” he said, reiterating the indication he had made last year that there were no plans to bring back GST in the short to medium term.

Anwar, who is also the finance minister, said that the implementation of GST has been an ongoing topic for decades, even during his time as finance minister in the 1990s. He disagreed at that time, believing that addressing corruption involving billions of ringgit was the priority.

The PM’s sentiments were echoed by ministry of investment, trade and industry (MITI) deputy minister Liew Chin Tong, who said that while GST is transparent, it taxes everyone, rich and poor. “He (the PM) made it clear that GST is only going to be implemented after a few years when the income level rises to an acceptable level,” he said.

Liew said that at present, only around 15% of Malaysians earn enough to qualify them for the threshold to pay income tax, and that needed to be changed. “Together, we should aim to create a society in which at least 60% of Malaysians earn an income that qualifies them to pay income taxes,” he said.

The tax was first introduced in April 2015 at a rate of 6% (which reduced prices for some cars) but was scrapped in 2018 after the then-new Pakatan Harapan government came to power, replaced by the 10% sales and service tax (SST). Despite the political changes that has happened since then, GST was never brought back, even though that possibility has been mooted several times.

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