Former prime minister Najib Razak today defended the introduction of the goods and services tax (GST) during his administration in 2015, urging the government to bring back the consumption tax as quickly as possible once the country recovers from the Covid-19 crisis.
Speaking in the Dewan Rakyat, he said this was because the government needed to reduce the income gap, attract investors and strengthen the country’s fiscal position.
He added that the GST, which had been aligned with aid packages for the people, had played an important role in reducing the income gap between the rich and the poor.
“This is contrary to the propaganda that caused some people to fall for the claim that the GST victimised those in the low-income group and caused the price of goods to rise,” he said when debating the 12th Malaysia Plan.
The GST was introduced by Barisan Nasional in 2015 to replace the sales and services tax (SST).
It was scrapped after Pakatan Harapan came to power in the 2018 general election.
Syed Saddiq Syed Abdul Rahman (Independent-Muar), interrupting Najib’s debate, raised three issues related to the implementation of the GST: expenditure leakage, slow tax refunds and high unemployment rates.
Najib’s debate was also interrupted several times by RSN Rayer (PH-Jelutong).
The former prime minister, defending his stand, said the GST had in fact helped to reduce leakage due to the contraction of the black economy worth RM300 billion a year.
“The price of basic necessities rose significantly after the SST was brought back to replace the GST,” he said.
“The GST is a consumption tax. The higher the expenditure, the higher the GST payment.”
Najib, who is the Pekan MP, said the value of GST collections distributed to the needy was more than the amount of tax they needed to pay.
His argument was supported by Pontian MP Ahmad Maslan, who said the inflation rate had also gone down once the GST was implemented.
“GST collections amounted to RM44 billion compared to RM21 billion from the SST – an additional RM23 billion,” Ahmad said.
He added that the people had been additionally burdened after the GST was scrapped in 2018 and replaced with six new taxes and three tax increases.