Timing is Key: The Potential Benefits and Pitfalls of Reintroducing GST in Malaysia

• The Malaysian government is considering reintroducing the goods and services tax (GST) to address the budget deficit and high public debt.
• GST is seen as an efficient tax system because it broadens the tax base and encourages savings and investment.
• Even if GST is imposed on 50% of consumption at a 6% rate, it could generate RM45 billion annually and halve the budget deficit.
• However, there are downsides to GST, including its regressive nature and the need for sustained economic growth before implementation.
• To navigate these pitfalls, the government should wait for robust economic recovery, start with a small tax rate, and ensure transparency and accountability in public finances.
• The public’s confidence in the GST as a tool of fiscal consolidation must be maintained.

Source: nst.com.my

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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