The Case for Reintroducing GST in Malaysia: A Sustainable Solution for Fiscal Resilience and Development

• The Goods and Services Tax (GST) is back on the national agenda in Malaysia.
• Malaysia’s spending needs have increased, requiring greater fiscal firepower.
• Government revenues have been falling for over five decades, resulting in low government revenue-to-GDP ratios.
• Relying on oil-related revenues or raising personal and corporate tax rates are not sustainable solutions.
• Broadening the tax base with a GST-like consumption tax is a viable long-term solution.
• A GST offers a transparent, efficient, and stable revenue stream.
• Implementing a GST requires careful policy design, implementation, and political resolve.
• Critics argue that a consumption tax like GST is regressive, but this can be offset through exemptions and increased spending on public services.
• Implementation challenges and capacity-building efforts are necessary for a successful GST rollout.
• The new GST should be introduced at a lower rate and gradually increased over time.
• Public perception and trust in fiscal management are crucial for the success of a new GST.
• A GST is not a cure-all solution but can provide the fiscal fuel needed for Malaysia’s progress.

Source: theedgemalaysia.com

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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