KUALA LUMPUR: Economists welcome the reintroduction of Goods and Services Tax (GST), anticipating its substantial impact on businesses, yet underscored the plan would only work with good governance.
"It has been proven in the past that the collection from GST has been forthcoming. The GST can be a catalyst to unearth the shadow economy as businesses along the value chain will be incentivised to become tax collecting agents as they can claim the input tax credit."
"In order to do so, these businesses need to be registered with the relevant authorities. Effectively, this can also help the government to build a good database on businesses," said Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid.
The economist further commented that the success of the GST initiative hinged on the establishment of good governance, which in turn will cultivate trust among the public.
"I think governance has always been the backbone of the present administration. With good governance and transparency, I suppose it can instil confidence among the general public."
Economy Minister Rafizi Ramli said the government is not ruling out reintroducing the GST which was abolished in 2018.
"The government will stick to our strategy and is open to go through any ways to achieve fiscal sustainability through a wider revenue base."
"Hence, whether it is going to be the GST, Capital Gains Tax or any form of direct and indirect tax, we will only decide on a case-to-case or year-to-year basis."
"Meanwhile, any announcement with regards to any introduction of new tax or revenue will then be made by the Finance Ministry from one budget announcement to another," he said in a press conference at parliament, today.
Previously, Prime Minister Datuk Seri Anwar Ibrahim in March this year said Malaysia is not ready for the reinstatement of GST anytime soon.
Anwar reiterated that the people's income and threshold must first be increased and at a reasonable level for GST to be reinstated.