GST is progressive, says Najib

‘Tax collection from high-income group benefits lower-income group’

PETALING JAYA: There is still a misconception that the Goods and Services Tax (GST) is regressive, said the Prime Minister.

Datuk Seri Najib Tun Razak, in his blog, said the GST mechanism in Malaysia was progressive because its implementation benefited the lowerincome group through welfare programmes made possible by it.

The exemption of GST on basic necessities, he said, ensured that the lowincome group was not affected by its implementation.

At the same time, he said those with high incomes would spend more, resulting in higher tax collection.

“The tax revenue is channelled directly to the B40 (bottom 40% of households) through BR1M (1Malaysia People’s Aid) to address the high cost of living, school aid, assistance to farmers, fishermen and small farmers, and special payment to civil servants.

“These targeted welfare programmes would not be possible if the high income group does not contribute a larger amount,” he said.

Najib said this meant that although the GST, which is set at 6%, applied to people in the lower income group as well, they stood to benefit from it multiple times compared with the middle and high income groups.

“The implementation of GST in Malaysia takes into account the economic situation of the people.

“The Government also continues to work towards guaranteeing the best quality of life for all Malay sians,” said Najib.

The GST came into effect on April 1, 2015, to replace the sales and services tax (SST).

Earlier, Najib said that GST collection was projected to reach RM42bil this year, adding that if SST were still in effect, only RM20bil would be collected.