KUALA LUMPUR: While Malaysians cannot expect the 6 per cent Goods and Services Tax (GST) to be removed overnight, they can expect a comprehensive plan to be announced within 100 days, former central bank governor Zeti Akhtar Aziz said in a briefing on Tuesday (May 15).
The comprehensive plan will include details on how and when to remove the GST without jeopardising the country's fiscal position, said Zeti, who is among the newly appointed council of senior advisers.
"We are not going to deviate from any of the rules and there is a process that needs to be entered into to undertake this kind of changes," she added. "So what we will do within the 100 days is to make announcement what we want to do and how it will be done."
The process to remove the GST may require parliament's approval, Zeti said.
The government must also address its fiscal position from the revenue and expenditure side. This includes reprioritising of projects, improving the efficiency of the public sector and reducing wastage.
“We have not decided whether it's going to be zeroised from 6 per cent to 0 per cent, we don’t know how it's going to be done, but it will be done. But the ultimate objective is well known to everyone, to put more purchasing power into the hands of the people, especially in the middle and lower income groups."
The hugely unpopular GST that was introduced in April 2015 has helped the government raise some US$10 billion last year, at a time when global oil prices were uncertain.
Rating agencies like S&P and Moody’s are concerned that scrapping the GST, removing toll and reintroducing fuel subsidies would burn a hole in the government’s coffers.
But Mahathir‘s Council of Elders has been shoring up confidence by making sure the fiscal shortfall will be plugged one way or another.
Zeti, who helmed the central bank for 16 years before her retirement in 2016, is now part of the Council of Elders set up by prime minister Mahathir Mohamad to oversee economic and financial matters during the 100-day government transition period.
Joining her in the briefing with fund managers was former finance minister Daim Zainuddin. Fund managers Channel NewsAsia spoke to said Daim had stressed that from now on, no politician should be allowed to helm government-linked investment companies like Permodalan Nasional Berhad (PNB), Khazanah or Retirement Fund (KWAP). Daim did not speak to the media.
Zeti also said that she was optimistic that the country would enjoy a credit rating upgrade once the fiscal matter is resolved.