She said the government was not keen on reintroducing GST because the service tax (ST) could provide a greater impact on the economy.

“The government will continue to prioritise and improve the existing tax system, and introduce taxation that does not impact vulnerable groups, before assessing the need to introduce new consumption taxes such as GST,” Lim said in the Dewan Negara.

She said the government wanted to ensure that any changes to the tax system would be progressive, easy to administer and not have a negative impact on the cost of living and economic growth.

Lim said the government’s focus for this year was on rationalising subsidies, so any plan to reintroduce GST would also have to take into account the effect on inflation.

“Although the average inflation rate for 2023 was 2.5%, for food and beverages it was nearly 5%.

“This is felt by the general population, so it was one of the reasons why service tax was kept at 6% for food and beverages,” she said when answering a supplementary question from Senator Ahmad Ibrahim.

In March, Prime Minister Anwar Ibrahim said Malaysia was not ready for GST any time soon because income levels were still too low.