GST may be coming back in Budget 2025? Good news or?
France was the first to introduce Goods and Services Tax (GST) or also known as Value Added Tax (VAT). There are 175 countries which has implemented VAT or GST as at August 2024. (Source: vatcalc.com). Once upon a time, Malaysia was also one of the countries but we are no longer using GST. We are back to the ‘amazing’ SST.
This was what Ministry of Finance said “”Overall, the GST collection from April 2015 until it was abolished in May 2018 amounted to RM184. 8 billion while the total SST collection was RM150. 4 billion between September 2018 and 2023,” MoF said in a written response posted on the Parliament’s website on Tuesday.” Source: bernama.com
I am a supporter for GST. In fact read the statements of those who opposed GST previously and we would realize now they are trying to appear more objective when it comes to GST. So, will GST be coming back? There’s this news about the potential, as per RHB Investment Bank analyst.
Article in paultan.org Aside from a targeted subsidy program for RON95 petrol, the upcoming Budget 2025 is also set to bring forth the reintroduction of the goods and services tax (GST). According to RHB Investment Bank analyst Alexander Chia, Malaysia is looking to broaden its tax base now that the unity government under prime minister Anwar Ibrahim is said to be secure.
“We are confident that the government will make more meaningful progress in subsidies and initiatives to broaden the tax base to further reduce the fiscal deficit, provide room for infrastructure investment and create opportunities to control the national debt.
“In this aspect, the two main initiative that have yet to be decided are the rationalisation of the subsidy of RON95 petrol and the reintroduction of GST which is compatible with the full implementation of e-Invoicing,” said Chia in a research note. Article in paultan.org
Some advantages of GST?
It’s HARDER to evade taxes. The reason is simple, every consumption of goods and services are taxed except the tax-exempted ones or tax free ones. Yes, I know, some does not think of this as an advantage but as a working professional, I would prefer this so that everyone is equal and everyone who should pay tax should be paying it.
GST simplifies the tax structure tremendously. Frankly, when the tax is not enough, then there will be more and more different types of taxes. Thus, it becomes ever more complicated too. Yes, there are definitely many more different types of taxes which could be introduced too.
It enhances transparency tremendously and there are no formulas. It’s just the GST on top of the input / selling price. Here are the general list of items which are exempted:
residential property
financial services
childcare and private education services
healthcare services
public transport services
I do hope for the good news, not sure about everyone though
If MoF has admitted that the tax collection is going lower despite the economy performing better, I wonder how would this impact the final decision of reintroduce or to delay this further. As usual, politics may get in the way or the government may have data references which most people do not have. My MBA professor teaching Decision Science said this a long time ago, “If decisions are guided by decision science, things will always be straightforward but many decisions are usually guided by political science instead.” The whole class laughed but well, that is always true in many countries.
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