Don't condescend, rakyat will back GST, subsidy cuts for more in return: Rafizi to Anwar

Prime Minister Anwar Ibrahim's supposed prioritisation of votes over policy development appears to remain a sore point for former economy minister Rafizi Ramli.

Presenting Bersama's shadow Budget 2027, the party's co-leader argued that while some of its fiscal reform proposals may be unpopular, politicians should not be too quick to patronise the rakyat.

Besides abolishing several cash aid schemes and the Budi95 fuel subsidy in favour of more targeted monthly assistance, the shadow budget also proposes reintroducing the goods and services tax (GST), capped at five percent.

"If one were to ask Anwar as finance minister, he would say that if we follow Rafizi's ideas, he (Anwar) will lose the prime ministership,” the former PKR deputy president said in his speech at the Bersama headquarters in Puchong last night.

"He didn't say it in front of me, but behind me, he would say, 'If we follow Rafizi's mind, no one will vote for us, so we cannot do this because the rakyat will be angry'.

“I don’t think we should be that condescending about the public because we are all driven by the same basic animal instinct - we want to maximise our utility (and) get the best deal,” Rafizi said.

He argued that if the government is willing to implement “important reforms” to strengthen the nation’s finances, it could win voters over by demonstrating how the measures would ultimately benefit them.

“If a government is able to prove a point that if you switch from an inefficient way of doing things to what we think is better, growth-driven, (and) can ensure better equity, yet you (the public) actually get more every month, I think you can sell the case to the rakyat,” he said.

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Citing measures in Bersama’s shadow budget, Rafizi gave the example of a B40 household that would lose around RM215 a month from replacing certain subsidies with “institutionalised social security assistance programmes”.

However, he said such households, which the shadow budget proposes should be assessed based on net disposable income, would instead receive monthly assistance including fuel and child allowances, as well as social pensions for eligible elderly citizens.

“If you take all these (schemes under an) institutionalised social safety net, they will receive around RM582 a month - that is the value proposition.

“You may have to forgo RM215 per month from the inefficient way that subsidies and everything is managed now, but if you get a monthly transfer of RM582 per month, that's an additional RM367. It's the same with M40 households, for example,” he added.

GST revival

On the shadow budget’s proposal to revive the GST, Rafizi acknowledged that he had previously criticised the consumption tax as a “regressive” measure that could place a disproportionate burden on lower-income households.

He opposed the introduction of GST under former prime minister Najib Abdul Razak in 2015 and, after resigning from Anwar’s cabinet last year, continued to warn that “ordinary people pay in the end”.

Rafizi said his core objection to the tax had not changed. The former Pandan MP noted that only about 1.2 million of Malaysia's roughly 16 million workers earn enough to pay income tax, meaning a switch to GST could shift more of the tax burden onto lower-income earners.

What had changed, he said, was the country’s fiscal position. Without the reforms proposed in Bersama’s shadow budget, he warned that government debt interest payments could reach RM70 billion a year by 2030, leaving almost no fiscal space.

Comparing the situation to someone who receives RM3,000 on the first day of the month but is left with RM5 for the remaining 29 days after meeting their commitments, Rafizi said a properly designed GST system, backed by guardrails, governance oversight, and transparency measures, was now “persuasive”.

“In exchange for reverting to GST, what kind of generational deal can we give to Malaysians, (particularly) those who are ageing, the Gen Zs, and millennials who have to carry the main tax burden in the next 10 to 15 years, and also for the future generation?

“If (the GST framework proposed by Bersama) gives us a pathway towards a balanced budget and surplus in 10 years' time, I don't think there's a lot that we can argue with.

“Of course, the final decision is never about economics, or policies, or merits of one policy versus the other; it's always about politics,” he added during a panel session following the shadow budget’s unveiling.

Doable and right measure

Also on the panel was former PKR lawmaker Wong Chen (below), who backed the proposed five percent GST as a “doable, right, and not populist” measure given the nation’s high debt levels.

The former Subang MP also criticised the government’s recently reported position that it would retain the sales and service tax (SST) while incorporating “good” features of GST, asking: “Why complicate things?”

Rafizi likewise dismissed the proposed “hybrid GST-SST” approach, saying it would be little different from GST in practice and mainly benefit corporate groups.

Amid massive public protests, Najib’s government introduced GST in 2015 to replace SST, generating a reported RM27.3 billion in net revenue in its first year.

Pakatan Harapan's first stint in Putrajaya under former prime minister Dr Mahathir Mohamad saw GST reduced from six percent to zero, before SST was reintroduced.

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