ALOR STAR: Experts in economics and politics have insisted that it is high time for the Pakatan Harapan-led unity government to swallow the bitter pill and reintroduce the Goods and Services Tax (GST) that was scrapped after it came to power in 2018.
They said the GST has been proven as a better taxation system as compared to the Sales and Services Tax (SST) that was revised by the government effective March 1.
Universiti Utara Malaysia economics expert Associate Professor Dr Irwan Shah Zainal Abidin expressed his concern that the government may not achieve its fiscal consolidation target of three per cent by next year through SST revenue.
"It seems very difficult to narrow the fiscal deficit. Under the Public Finance and Fiscal Responsibility Act, fiscal deficit must come down to three per cent by next year and debt-to-GDP ratio down to 60 per cent by 2025.
"On the other hand, the expected increase in revenue from the changes in SST is only around RM3 billion. At the same time, the latest growth rate had missed the target and more spending to help the people is needed right now," he told the New Straits Times when contacted.
Irwan pointed out the adverse impact of SST was a tax-on-tax effect.
"Under SST, you cannot claim any input tax and this will compound the tax effect to the consumers," he said.
As such, he said, the federal government should seriously consider reinstating GST, which had been introduced by Datuk Seri Najib Razak's Barisan Nasional administration in April 2015 before being scrapped three years later.
"If the government is serious about implementing real economic reform, a tax system which is efficient, transparent and fair is needed.
"GST is not only efficient, transparent, and fair relative to SST, it is also more superior than SST in so many ways, like the ability to address the black economy, to reduce income inequality, to attract investments, and to lessen our reliance on oil and gas revenue," he said.
Irwan added that now was a good time for this, since political stability is already in place.
"This year is seen to be the year to undertake real economic reforms... reintroducing GST now is certainly the way forward for Malaysia," he said.
Echoing Irwan, political analyst Muhammad Izmer Yusof from Universiti Malaysia Perlis said with two-thirds majority in Parliament, thanks to the support of several Bersatu elected representatives, the unity government commands comfortable support to undertake necessary reform measures.
However, he said it may not be a straightforward matter as PH was in a dilemma when it comes to resurrecting the GST.
"Obviously PH is in a dilemma. They had fiercely objected to the GST when it was introduced in 2015.
"From a political point of view, PH is worried that it will taint its image and the opposition will use it as a political bullet to attack the government. Probably, they can't take back their words in criticising GST back then," he said.
However, Izmer also agreed that PH leaders should seriously consider GST as it is proven to be a more effective and transparent tax system than the SST.
"Frankly speaking, PH has just to eat humble pie and admit that GST was not as problematic as they had claimed when they were in the opposition.
"As the current government, it is time for PH to do something that might not be a popular decision but must be done because of its benefits to the country and the people," he said.
Izmer also agreed with Irwan that now is the right time for the government to reintroduce GST as the next general election will only be held in three years' time.
"The longer the wait, the more difficult it will get for government to do the right things. The government is solid now with over two-thirds majority. It is not likely to be toppled," he said.
Izmer added that the unity government has more than ample time to introduce new initiatives to improve the people's livelihood through higher revenues generated from economic reforms.
"With improved revenue, this government will have ample time to roll out new initiatives to over the people's support before the next general election," he said.
Izmer pointed out that the government has to come up with a concrete solution to mitigate the high cost of living among the people, particularly the vulnerable group.
He said although the government has rolled out the Rahmah initiative, it is still far from sufficient to mitigate the impact of global inflation on the general Malaysian population.
"Rahmah sales is not a comprehensive solution to the whole needy group. It is not being held daily and not everyone has the time to stand in extra-long ques to buy essential items at subsidised price," he said.
Izmer said Umno leaders should play their part to convince leaders in PH to seriously consider reintroducing the GST since they are now part of the government.
"I also hope that the opposition parties will also support the move because now is not the time for politicking.
"Everybody, both in and outside the government should focus looking after the people and rejuvenating our economy.
"We are talking about a serious cost of living issue at this intense level which has never been experienced in any other economic or health crisis before," he said.