Former prime minister Najib Abdul Razak has taken issue with Prime Minister Dr Mahathir Mohamad's accusation that his policies had fostered a society that expected "free money".

"It is not free money. But if redistributing money from the dark economy, the rich who evade taxes to help the people is considered an illegal act, then I have sinned," he said in a statement today.

Earlier today, Mahathir accused the previous BN government of conditioning Malaysians to expect "free money" but the new government could not continue with such policies as it must service huge debts incurred by the previous administration.

However, Najib said his government was able to implement various handouts due to the goods of services tax (GST), which the new Pakatan Harapan government is abolishing.

The GST, Najib said, ensured that rich and black economy do not escape from paying taxes, money which can be used for the benefit of the people.

He claimed it was Mahathir's belief to keep wages low so that the country can be attractive to foreign investors.

Najib, citing Bank Negara's statistics, said as a result of the zero-rating of GST in June 2018, the government's revenue was only RM14.1 billion compared to RM20.9 billion a month earlier.

The Pekan MP claimed Mahathir's assertion that the government was short on money to pay the previous government's debt was an excuse.

"The government's debt at 50.8 percent of gross domestic product cannot be considered as high compared to the 80 to 103.4 percent during Mahathir's first time as prime minister.

"The debt service charge, at 12.5 percent, is also not as high as his era in the 1980s and 1990s when it was between 20 to 30 percent and had even hit a high of 31.8 percent," he said.

Najib said the country's deficit had also been on a downtrend when he was the prime minister.