PETALING JAYA: The business fraternity is in favour of the revival of the Goods and Service Tax (GST) and asking the government not to wait until the minimum wage reaches the RM3,000 to RM4,000 threshold to reintroduce it.
Malay Economic Action Council (MTEM) senior fellow Ahmad Yazid Othman said the revenue from GST could actually be used to incentivise and supplement micro, small and medium enterprises (MSMEs) needing to adjust to the new minimum or progressive wage.
In fact, he said MTEM accepts the fact that wages need to be increased but the government will have to explain how and when it will be implemented.
“GST should be brought in now rather than later, but it should start at a lower rate so that we can ensure that it will be implemented more efficiently, effectively, with less leakages and cost so that it will give the government more revenue to implement development projects as well as cash transfer,” he said.
Prime Minister Datuk Seri Anwar Ibrahim said on Sunday that GST would be brought back once the minimum wage reaches between RM3,000 and RM4,000 per month.
Meanwhile, Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president Nivas Ragavan said it is rather a cautious approach on the government’s part to revive GST only when the minimum wage is raised to RM3,000-RM4,000 as this will balance both economic stability and social welfare.
“Raising the minimum wage to RM3,000-RM4,000 is intended to ensure lower-income households have greater disposable income before implementing a consumption tax that can disproportionately affect them.
“However, while the government’s goal is noble, we must ask whether it is feasible. There are several challenges. The business community, especially MSMEs, are still recovering from post-pandemic shocks and other inflationary pressures.
“An immediate wage increase to RM3,000 or RM4,000 could strain employers who are grappling with rising operational costs,” he added.
“In this context, businesses might pass these costs onto consumers, potentially negating the income gain for workers. A more gradual increase in the minimum wage might help mitigate this, allowing businesses to adjust without significant disruption.”
He said if Putrajaya is to wait till the minimum wage reaches the said threshold to reinstate GST, it will further delay the availability of funds that can be used for public service.
SME Association of Malaysia President Chin Chee Seong said businesses are in favour of the return of GST, adding that if the broad-based tax is not revived, the government may resort to other mechanisms, including introducing new taxes or doing away with subsidies to make up for revenue shortfalls.
“I think it is not practical for us to wait until the minimum wage reaches RM3,000 to RM4,000,” he said, as the current minimum wage rate of RM1,500 is still far from that.
He said the government should help SMEs increase their competitive advantages, especially with foreign companies, instead.
“We should consider the economic situation, allocate more funds to help spur the country’s economy with more government projects and help SMEs with exports,” he said.
Agreeing with Chin, Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) treasurer-general Datuk Koong Lin Loong said without GST, the government will have to explore alternative ways to boost the country’s revenue, including implementing new taxes and cutting back on subsidies.
“Malaysia’s tax revenue base is quite narrow and we have granted numerous tax incentives. To reduce our expenditures, we may need to consider cutting back on some of the subsidies we currently offer,” Koong added.
