Malaysia said to be weighing return of GST as it seeks to boost finances

Malaysia is weighing the return of a broadbased consumption tax instead of implementing subsidy cuts for a commonly used petrol as the government seeks to bolster its finances, according to people familiar with the matter.

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Prime Minister Anwar Ibrahim's Cabinet has been discussing the viability of bringing back the goods and services tax (GST), the people said, asking not to be identified as the information is private.

No decision has been reached given the political sensitivities, they added. But But government spokesman Fahmi Fadzil on Aug 29 denied plans to reintroduce the GST.

"No, there were never discussions," national news agency Bernama quoted Mr Fahmi as saying.

There is an emerging view in government that imposing GST may be politically easier than removing subsidies for the popular RON95 petrol, since the South-east Asian country is an oil producer and most Malaysians consider cheap petrol to be a necessity, the people said.

Still, bringing in a consumption tax is a political minefield for governments in Malaysia that have struggled for decades to boost tax collection rates, among the lowest in South-east Asia.

Passing legislation to reinstate GST is easier with a two-thirds majority in Parliament, which Datuk Seri Anwar controls through his coalition, but government lawmakers are more than likely to be against it.