Kamal Salih said MIER had been an advocate of GST since 1988 because it believed in its merits.

“I have concerns that MIER’s abandoning of GST in favour of HSST could damage its reputation,” he told FMT when commenting on the think tank’s proposal for a 10% HSST.

MIER claimed that its proposed alternative would be more efficient than GST and would affect only the most important sectors of the economy.

Kamal said the claim lacked evidence to support it.

“There’s no study or data to back the argument for a HSST,” he said. “The fact remains that the government’s decision to ditch GST in 2018 was a mistake from which the country has not recovered fiscally.”

He acknowledged that GST was not perfect, but claimed it was the most efficient form of taxation, adding that there were measures to correct the imperfections.

“I’ve always said GST must be complemented by tax reforms such as a capital gains tax,” he said.

“Exemptions and thresholds should be adhered to if GST is to work. This is to ensure the impact of the tax is fair to all, rich and poor alike.”

Economist Barjoyai Bardai of Universiti Tun Abdul Razak said he saw MIER’s proposal as an upgrade of the SST.

“In the short term, it could increase tax collection and perhaps lead to a reduction in retail prices,” he said. “But in the longer term, we need to seriously think about going back to GST, with improvements based on lessons learned from our first experience with it.”

He noted that GST was recognised as an efficient indirect tax system by the European Economic Community, which has made it a prerequisite for any European country seeking to join it.

“GST is so comprehensive that it was effective in tackling the shadow economy in Malaysia, which was valued at RM300 billion when it was introduced,” he said.