KUCHING: Sentosa State Assemblyman Wilfred Yap has urged the federal government to reinstate the Goods and Services Tax (GST), or introduce a Value Added Tax (VAT), as part of a long-term strategy to strengthen Malaysia’s fiscal foundation. He cautioned that continued reliance on Sarawak’s oil and gas resources is both unsustainable and unfair to the state.
“As Malaysia aims to become a high-income and developed nation, our fiscal policies must be grounded in sustainability and long-term planning,” Yap said. “The return of a broad-based consumption tax like GST or VAT is essential if we are to reduce dependence on natural resources and future-proof our economy,” he said.
He pointed out that over 160 countries, including Malaysia’s regional neighbours such as Singapore, Indonesia, and Thailand, have long implemented GST or VAT systems for their proven ability to generate consistent revenue without hindering economic growth.
“In contrast, Malaysia’s current Sales and Service Tax (SST) is narrow, outdated, and inefficient. It fails to cover large segments of the modern economy and results in cascading tax effects that unfairly impact consumers,” he explained.
Yap believes that merely expanding the SST base, as proposed by the current government, will not solve the underlying structural problems in the nation’s tax system.
“The SST model is fundamentally flawed. What we need is real reform, not superficial adjustments. The Unity Government’s focus on fine-tuning SST misses the bigger picture,” he added.
Yap also criticised the federal government’s continued dependence on Sarawak’s oil and gas revenues through Petronas, arguing that such a model undermines the spirit of the Malaysia Agreement 1963.
“Sarawak’s petroleum resources primarily belong to Sarawakians. Their ongoing exploitation without a fair and transparent revenue-sharing mechanism is unjust and disregards the founding principles of our federation,” he said.
He stressed that a modern and equitable tax framework, such as GST or VAT, can be designed to minimise impact on low-income groups while ensuring sufficient revenue for national development.
“A carefully structured GST or VAT — with a low starting rate, exemptions for essential goods, targeted support for B40 households, and strong anti-profiteering enforcement — can provide the government with a transparent and stable source of income without burdening the rakyat unnecessarily,” Yap said.
He further noted that the 2018 removal of GST was politically motivated, and that current fiscal pressures demand a return to sound economic reasoning.
“It’s time to stop politicising tax reform. GST or VAT, not SST or Petronas, must form the foundation of Malaysia’s long-term financial stability. Responsible governance means making decisions that benefit the country in the long run, not just short-term popularity,” he added.
By Connie Chieng