Malaysiakini News

Sales tax must be restored if GST abolished, says Dr M

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Pakatan Harapan chairperson Dr Mahathir Mohamad said the sales tax would need to be restored if the goods and services tax (GST) is abolished.

"The GST replaces the sales tax. So if we abolish the GST, we must restore the sales tax," he said in an interview with news portal The Malaysian Insight this morning.

The former prime minister said this was necessary to minimise the impact of reduced income from the GST on the government's finances.

“All processes by the government should be done stage by stage. If you suddenly abolish the GST, you will have no source of income and that will be bad for the government,” he said.

Mahathir was responding to a question on Harapan's pledge to abolish the GST if it wins the next general election.

During his time as prime minister, Mahathir said, similar considerations regarding the impact on the people and government finances were made when there was a need to raise petrol prices.

“This (increased taxation) can be reversed in a way that does not hurt the government or the people,” he added.

Earlier, Mahathir noted that Malaysia's economy was more prosperous now, with companies making profits in billions of ringgit, compared with the period during the country's developmental years during his tenure.

At the same time, he claimed that mismanagement under Prime Minister Najib Abdul Razak had led to increased taxations on the people.

“At this moment, there should not be any problem with financing. But because there is an abuse of government's funds, we seem to be very poor.

“And because we are very poor, the government thinks the only way to overcome this is to increase taxes,” he said.

In defending the GST, Najib had argued that the government would not be able to pay the salaries of civil servants, build new schools and hospitals and cover the expenditure of the security forces, without its contributions of some RM40 billion to the annual federal budget.

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