The Socio-Economic Research Centre (SERC) said this would help build fiscal buffers for the country to mitigate against future economic shocks, adding that re-implementing GST on Jan 1, 2024 would provide the public adequate lead time.
SERC executive director Lee Heng Guie said a survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) showed that 75.4% of 398 respondents agreed with the reintroduction of GST.
Lee also pointed out that 64.1% prefer the GST regime to start at a rate of 4% while 68.8% wanted six to 12 months for its implementation.
“Malaysia’s small open economy remains vulnerable to shocks, more so with the increasing risk of recession. So, we need an adequate buffer.
“However, I don’t think the government will implement it as the general election is coming. Voters might not like it due to the stigma around GST,” he said at a press conference.
He also said if GST was ever reintroduced, the government should come up with a system to expedite refunds for small and medium enterprises (SMEs).
Lee added that efforts to mitigate against inflation and the higher cost of living should also be addressed in the budget.
“A one-off cost of living cash payment for poor households is needed. Also, (the government should) explore using the MySejahtera application (to distribute) cash vouchers and reduce out-of-pocket expenses for the elderly through higher tax allowances,” he said.
Lee also said there was a need to revitalise private investment in the country, adding that the government should increase the first threshold of chargeable income of SMEs to a tax rate of 17%.
He said reinvestment allowance for businesses, which is due to expire in 15 years, should be extended to a further period of five to 20 years.
With many businesses pushing for sustainability, Lee said, the government should provide loans and grants for “green investments” ranging from sustainable agriculture and energy-efficient buildings to electric vehicle (EV) infrastructure.
“The government should also provide corporate tax credits to encourage investment in renewable energy production,” he said.
Lee said the budget should also concentrate on raising the competitiveness of SMEs in the country and supporting tourism recovery.
He estimated Malaysia’s gross domestic product (GDP) growth in 2022 to be at 6.5%.
“For 2023, real GDP is forecast to grow at a moderate pace of 4.1% due to weakening global growth, the normalisation of domestic demand and also the high-base effect.”
Lee also expressed hope that the budget will focus more on development and structural reforms rather than be merely being “election-centric”.
“Also, since massive stimulus packages as delivered during the Covid-19 pandemic are no longer required, we estimate a deficit budget of 4.5% to 5.5% of the country’s GDP in 2023, compared to an estimated average deficit of 6.2% from 2020 to 2022,” he added.