A MCA-linked think tank says the 2026 budget should have unveiled a multi-year roadmap to replace the “inefficient” sales and service tax.
The Institute of Strategic Analysis and Policy Research (Insap) said Prime Minister Anwar Ibrahim’s budget announcement today failed to touch on the country’s structural tax weaknesses and made no mention of the goods and services tax.
“Instead, the 2026 budget doubles down on e-invoicing, a bureaucratic measure that increases compliance costs without fixing the system,” Insap said in a post-budget statement.
“A phased GST with exemptions for essentials would be a fairer and more transparent model,” it said.
“Collecting more through enforcement while refusing to reform is politically cautious but economically weak.”
The goods and services tax, with an initial rate of 6%, was introduced in 2015 but was abolished when Pakatan Harapan gained power in 2018.
The tax raised nearly RM185 billion in revenue between April 2015 and May 2018.
In July, 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, Anwar said that Putrajaya would only consider reintroducing the GST once the economy improves and the minimum wage reaches RM4,000 or more.
The sales and service tax, expanded on July 1, is expected to generate an additional RM5 billion in revenue for the second half of 2025 and add a total of RM10 billion in new revenue in 2026.
