Any move to bring back the goods and services tax (GST) would burden poorer households who are not paying taxes and drive up inflation, says Rafizi Ramli.
The former economy minister said under the GST, households which are not paying any income tax because their earnings fell below the taxable threshold, would have to “pay tax for the first time”.
“GST is a regressive tax because, in the end, it is ordinary people who pay,” he said in the latest episode of the “Yang Berhenti Menteri” podcast.
The Pandan MP said under the current sales and service tax (SST), these groups of people are spared from being taxed as certain items were exempted.
The government previously said that basic necessities will continue to be exempted from the SST.
“But when GST is imposed, all daily essentials are taxed. That could mean RM1,000 to RM2,000 a year in new costs for families who have never paid any (income) tax before,” Rafizi said.
He also warned of a spike in the price of goods, similar to what happened when GST was introduced in 2015.
“Any time GST is implemented, you will see a jump in prices, if GST is 6%, then prices go up six or seven per cent. In Malaysia, once prices go up, they rarely come back down.”
Rafizi said the government’s priority now should be keeping inflation at about 2% while pushing wage reforms, before considering GST in the future.
As of June 2025, the inflation rate is at 1.1% year-on-year, it was reported.
“This is not about politics. It’s about maintaining price stability and giving enough runway for wage growth to outpace inflation.”
In 2023, Rafizi was reported to have said that the reintroduction of the GST, despite it being the most efficient tax in combating tax evasion, would add a financial burden on low income households.
Last month, finance minister II Amir Hamzah Azizan said the government had ruled out reintroducing the GST for now, calling it “impractical” given the current economic conditions.
He said the government did not dispute the merits of the GST system but believed that it was “not suitable for now”.
In June, Prime Minister Anwar Ibrahim said that Putrajaya would only consider reintroducing the GST once the economy improves and the minimum wage reaches RM4,000 or more.
