Kuala Lumpur — Despite high national debt, Malaysian Prime Minister Anwar Ibrahim ruled out reintroducing the goods and services tax or a broad-based consumption tax on Tuesday.
Parliamentary address Prime Minister’s Question Time, Datuk Seri Anwar said the government will cut subsidies “for the rich” and reduce wastage and corruption to lower debt.
No GST or broad-based consumption tax. In response to Taiping MP Wong Kah Woh, Mr. Anwar said, “We plan to reduce subsidies for the rich, like we did with the electricity tariff.”
Mr. Anwar added, “We will look at good governance to repair (wastages).
After taking power in 2022, Mr. Anwar reduced public electricity tariff hikes but kept international corporation rates high.
On Tuesday, he said the national debt had reached RM1.5 trillion (S$459 billion), or 82% of GDP.
GST was implemented under former premier Najib Razak in 2015, but it was unpopular and scrapped by the previous Pakatan Harapan administration in 2018 after winning elections.
Since 2022, calls to reintroduce GST have grown as the government seeks to increase revenue to reduce debt and move towards a targeted subsidy system.
Malaysia spent RM80 billion on subsidies in 2022, a record.
Mr. Anwar’s predecessor, Datuk Seri Ismail Sabri Yaakob, admitted that his administration was considering reintroducing GST, saying that despite the tax system’s unpopularity, the government had few options for expanding its income base.
The Federation of Malaysian Manufacturers urged Mr. Anwar to reintroduce GST at 4% in January to reduce national debt and help the state prepare for an economic downturn.
In 2018, Barisan Nasional lost the general election for the first time since Najib introduced GST at 6%.
Analysts said the government’s credibility was more important than the debt figures, so Mr. Anwar’s anti-corruption agenda could be crucial if successful.
Debt isn’t always bad. Dr. Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs, said that global finance houses are concerned about the government’s creditworthiness.
Dr. Oh added that fighting corruption gives confidence that Malaysian money is well spent and not wasted.
The 1Malaysia Development Berhad (1MDB) scandal cost Malaysia at least RM20 billion in public funds.
On Tuesday, Mr. Anwar said the government is paying RM18 billion in 1MDB debts.
Najib is currently in jail after being convicted for 1MDB-related graft charges.
In 2022, an RM9 billion littoral combat ship scandal came to light, leading to the former managing director of a Malaysian shipbuilding company being charged with criminal breach of trust.
After two years of the COVID-19 pandemic, Malaysia has inflation and a slow economy.
Info Source – The Straits Times