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Malaysia will consider goods and services tax when time is right: Minister
KUALA LUMPUR (BLOOMBERG) – Malaysian policymakers should consider reintroducing the goods and services tax (GST) at an appropriate time, Economy Minister Mustapa Mohamed said on Thursday (Aug 12).
“While the government will always put the people first, when this crisis settles down and things normalise, we must begin to gradually set our economy back on a sustainable fiscal footing,” said Datuk Seri Mustapa in a speech at a briefing by the Organisation for Economic Cooperation and Development (OECD).
He was commenting on a recommendation by the OECD that Malaysia bring back the consumption-based tax in the medium term to boost its falling revenue.
The GST was repealed in 2018 as part of policy changes that the previous government introduced after winning a historic election.
The OECD in its economic survey published on Thursday said that the tax, first imposed in 2015, had helped shore up the federal government revenue “tremendously”.
Malaysia’s fiscal situation has been strained since last year due to economic contraction, a steep decline in revenue, and increased spending on healthcare and income support, said Mr Mustapa.
And the virus outbreak is not showing signs of abating – a record 21,668 new cases were added on Thursday.
Malaysia’s central bank is set to lower its 6 per cent to 7.5 per cent growth forecast for the year when it reveals the second-quarter data on Friday.
The OECD projects the economy to grow 4.3 per cent in 2021, and 6.1 per cent in 2022. Even so, the estimates are big improvements from last year’s 5.6 per cent contraction, Mr Mustapa said.
“Malaysia will deliberate on some of the OECD’s recommendations, and where suitable, will incorporate them into our medium term and long term economic policies,” he said.