He said taxation was not the only means to raise additional revenue, adding that a reintroduction of the goods and services tax (GST) would burden the people.
Sim said it was important that the government first manage its spending by focusing on targeted subsidies and minimising leakages.
“Instead of making the B40 and M40 pay more tax, we (the government) said let’s deal with efficiency (by asking ourselves) how we can manage our resources and spend more efficiently.
“There are still many other avenues (available to increase) government revenue. We do not start with (taxing) the people. We start with dealing with how the government is managing (its) spending.
“There’s going to be an introduction of e-invoicing (by the Inland Revenue Board) to minimise tax evasion. There are also anti-corruption measures such as (requiring) open tenders. All of these go towards increasing revenue.
“Let’s fix these things and get more money out of this, and at the same time, we adjust the tax rate to increase a bit of revenue. And once this has been exhausted, then we will consider (other taxes) and the discussion of GST will come,” he told FMT in an exclusive interview.
Sim reiterated that now was not the right time for the reintroduction of GST as it will only end up burdening the people, since the broader based tax would cover more products and services.
“Sales and service tax (SST) covers only about 41% of services. If you introduce GST today, we are talking about almost 80% of services, which will give rise to price increases.
“Perhaps in the future, this discussion can come up again,” he said.
A 6% GST was introduced in 2015 under then prime minister Najib Razak, but it was abolished by the former Pakatan Harapan government and replaced with the current 6% SST system in 2018.
When unveiling the 2024 budget on Oct 13, Prime Minister Anwar Ibrahim said the SST rate will increase to 8%, with food and beverages and telecommunication exempt from the hike.
Under the existing SST system, Putrajaya collected an estimated revenue of RM26.7 billion and RM27.9 billion in 2020 and 2021, respectively, compared to RM44 billion from the GST in 2017.
Cheaper electric vehicles
Meanwhile, Sim said the government is working towards introducing cheaper electric vehicles (EVs) to make them more accessible to the people.
However, he said it would take time due to factors like the prevailing mindset of Malaysians towards EV adoption, the need to prioritise infrastructure for EV charging, and addressing issues arising from vehicle maintenance.
“We are working with the investment, trade and industry ministry to craft an EV strategy. The adoption rate of EVs is still very low, so we are trying to do a step-by-step process to make (them) more accessible,” he said.
To that end, the government has introduced several measures, including exempting excise duty and sales tax for locally assembled EVs until Dec 31, 2027.
The ministry has also extended the import and excise duty exemption for imported EVs to Dec 31, 2025.
In the recently tabled 2024 budget, Anwar also announced a scheme that would encourage those earning up to RM120,000 annually to buy electric motorcycles. Buyers are expected to receive rebates of up to RM2,500 each under the scheme.