Business · Malaysia Bureau
Malaysia Should Reconsider GST Alternative, Says Tax Reform Advocate
Calls are growing for Malaysia to explore alternative taxation models rather than reintroducing the Goods and Services Tax, with critics arguing the levy disproportionately affects lower-income households.
LSN Malaysia ·
Tax reform advocates in Malaysia are renewing debate over the country's approach to indirect taxation, challenging proposals to reintroduce the Goods and Services Tax (GST) as a solution to government revenue challenges.
Critics argue that GST, a broad-based consumption tax, places a heavier burden on lower-income Malaysians who spend a larger proportion of their earnings on taxable goods and services. The regressive nature of such levies means they take a larger percentage from those least able to afford additional taxation.
Instead of pursuing GST through alternative policy mechanisms, observers suggest Malaysia should examine other taxation options that could generate necessary government revenue without disproportionately impacting vulnerable populations. These could include progressive income tax adjustments, wealth-based taxation measures, or targeted levies on specific sectors or activities.
The debate reflects broader concerns about taxation equity and the impact of fiscal policy on Malaysia's lower and middle-income households, particularly as the country navigates economic pressures and budgetary constraints.
Malaysia removed the GST in 2018 and replaced it with the Sales and Service Tax (SST), which operates differently and has generated ongoing discussion about the optimal tax structure for the nation's revenue needs.