KUALA LUMPUR: There will be a drastic increase in the price of goods if the Goods and Services Tax (GST) is introduced now, says former second finance minister Datuk Seri Johari Abdul Ghani.
He said that this is because the present economic situation is uncertain.
Johari added that if the GST is introduced at times of economic uncertainty, it will lead to a spike in prices.
“When the GST was implemented previously, there was a drastic increase and it’s called a one-time increase in stocks and raw material,” said Johari in Parliament on Tuesday (Feb 14).
Johari was responding to Datuk Dr Ku Abd Rahman Ku Ismail (PN-Kubang Pasu), who interjected the Titiwangsa MP’s speech on the King’s decree in Parliament.
Johari said if the GST was to be reintroduced, it must be done at a suitable time.
“With the uncertain economic situation, it will only worsen the inflation that we are facing now, " said Johari.
Johari also said he backs the GST taxation system that was previously introduced during the former Barisan Nasional administration in 2015 to curb the “black economy”.
“This was the best system to check the black economy and indirectly, it increased government revenue.
“It is to ensure that all of us pay taxes and to identify companies who are evading taxes,” said Johari.
The black economy comprises those who evade taxes or do not pay the appropriate amount of taxes.
In 2019, the black economy accounts for 18.2% of the GDP or almost RM100bil.
On Tuesday (Feb 14), Prime Minister Datuk Seri Anwar Ibrahim had told Parliament that Putrajaya has no plans to reintroduce a GST or any other broad-based consumption tax.
Instead, Anwar said that the government will look to reduce subsidies enjoyed by the wealthy.
Earlier in his speech, Johari was concerned over the present state of the economy, saying that the country was lagging behind neighbouring countries.
Johari said gross domestic product (GDP growth was at 5% annually between 2017 and 2018.
However, from 2020 to 2022, Johari said the GDP only grew an average of 1.9% each year.
Johari said this means that Malaysia was lagging behind Indonesia, Singapore and Vietnam in terms of economic growth.
“What is worrying is that GDP growth for Q4 of 2022 showed a decline of
2.6% compared to Q3 that year,” said Johari.
Johari cited the World Bank’s forecast, which stated Malaysia’s economy will grow 4% this year and 3.9% next year, which is lower than the 5% growth registered before the pandemic.
Johari also noted that the World Bank’s forecast for Indonesia, the Philippines, and Vietnam were between 4.8% and 6.5%, higher than Malaysia.
“These figures are very worrying,” added Johari.
Meanwhile, Johari said that the World Bank and the International Monetary Fund (IMF) is predicting a slowdown in global economic growth, which will affect South Korea and Japan.
Both South Korea and Japan, said Johari, are main trading partners of Malaysia.
“Slower economic growth will affect the economy and job opportunities, leading to reduced household income that does not commensurate with the rise in cost of living,” added Johari,
“I do not mean to spook this House, but I want to give a clear picture to everyone here that it is important for the government and all of us to look at these figures and see how we can re-strategise, so that the same trend will not continue for the next five to 10 years,” added Johari.
On Tuesday (Feb 14), Fitch Solutions Country Risk and Industry Research (Fitch Solutions) said the forecast of Malaysia’s GDP growth will be at 4% this year compared with 8.7% last year.
Although Malaysia registered a GDP growth of 8.7% in 2022, the quarter-by-quarter growth last year recorded a steady decline.
The first quarter of 2022 recorded 3.8% growth in Q1, followed by 3.5% in Q2, 1.9% in Q3 and subsequently -2.4% in Q4.
