GST Should Be Implemented If It Is More Effective, Says Malaysian Lawmaker

Malaysia should reintroduce the Goods and Services Tax if it can operate more effectively than the current Sales and Services Tax, Kepong MP Lim Lip Eng said.

Lim said the government should not create a complicated hybrid tax system merely to avoid using the GST name. If GST returns, he said, it should include stronger protections, faster refund processing and targeted assistance for lower-income Malaysians.

“The effectiveness of a tax policy does not depend on the name given to the system,” Lim said in a statement. “It should be designed around how effectively it is implemented. Therefore, bring back GST with proper implementation if the tax system is more effective.”

The government has reportedly been open to studying whether elements of SST and GST could be combined to make Malaysia’s tax system more progressive. Prime Minister Anwar Ibrahim has said SST will remain the foundation, while leaving open the possibility of adopting suitable GST features.

Lim urged the government first to prove that SST can deliver its RM59.6 billion tax-return target this year. Before developing a hybrid system, he said, officials should disclose the total amount businesses have reclaimed, how quickly refunds are processed, how much revenue remains after refunds, and which sectors still face double taxation and additional compliance costs.

He said those details would determine whether a new system would be easier, fairer and more effective than SST.

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The effectiveness of a tax policy does not depend on the name given to the system. It should be designed around how effectively it is implemented. Therefore, bring back GST with proper implementation if the tax system is more effective.