This article first appeared in The Edge Financial Daily on October 9, 2019

KUALA LUMPUR: The government, for now, will focus on improving the current sales and service tax (SST) system rather than bringing back the goods and services tax (GST), said Prime Minister Tun Dr Mahathir Mohamad. That is because it is inappropriate for a country to change its tax system frequently, he added.

“It (a change) will affect investors’ confidence, giving them a poor image of the country,” he told Dewan Rakyat yesterday. “Currently, the government is undertaking improvements to strengthen the SST implementation.”

On reintroducing the GST, Dr Mahathir, also Langkawi member of parliament, said the system requires a further study to gauge the impact on prices for consumers, inflation rate and the additional compliant cost to businesses.

He said businesses have to incur costs to change their computer systems and provide training for their staff for compliant purposes.

The premier also said since the GST implementation by the previous Barisan Nasional government, the people faced an additional burden especially those who experienced late payments of their input tax credit.

Dr Mahathir was responding to Ma’mun Sulaiman’s (Warisan-Kalabakan) parliamentary question on the government’s position concerning reintroducing the GST.

Datuk Seri Ismail Mohamed Said (Barisan Nasional-Kuala Krau), in Dewan Rakyat yesterday, also asked about the government’s plan to address a shortfall in the SST collection of about RM20 billion this year, compared with the previous GST collection of over RM40 billion a year.

Dr Mahathir said it is normal to experience a shortfall in tax collection whenever a new tax system is implemented.

“Indeed, there is a shortfall [in tax collection under the SST] whenever a new tax system is implemented because we need to adjust ourselves to the changes,” he said, adding that he is confident that the SST collection will surpass that of the GST in future.

On Oct 3, Dr Mahathir said the government will study the possibility of bringing back the GST “if that is what the people want”.

His comments on the GST came after the Malaysian Institute of Economic Research was reported to have urged the government to reintroduce the tax in Budget 2020 at a lower 3%. On Sept 1, 2018, the SST replaced the GST scheme, which lasted less than three years.