Malaysian Prime Minister Anwar Ibrahim said on Thursday that the government will not bring back the goods and services tax (GST) until the minimum income of Malaysians reaches RM4,000 a month, keeping the narrower sales and service tax (SST) as the main consumption levy for the foreseeable future.

For investors in Malaysian government bonds and consumer stocks, the statement settles a recurring question: the government is not planning a broad-based tax to close its deficit. Fiscal consolidation will instead rely on SST adjustments, lower borrowing and, according to Anwar's own figures, a slow decline in the debt ratio while spending keeps rising.

Speaking during Prime Minister's Question Time in the Dewan Rakyat on Nov. 12, Anwar said a GST could be reconsidered once incomes hit that level, because the tax would then not be "considered too burdensome," according to The Star. Until then, he said, the tax would weigh too heavily on households. Anwar, who is also finance minister, said the decision rested on economic grounds and household welfare rather than politics, according to The Star.

SST already raises 3.2% of GDP

Responding to a question from Ipoh Timor lawmaker Howard Lee on whether GST would raise more money than SST, Anwar said SST collections currently amount to 3.2% of gross domestic product, the same share GST brought in during 2017, according to both The Star and DayakDaily. He argued that switching back would not guarantee higher revenue.

He set out the differences in coverage. About 2,000 items are exempt under SST, compared with roughly 750 under GST, he said. GST reached about 700,000 businesses when it was in force in 2018, while about 130,000 are covered by SST, The Star reported. In Anwar's framing, SST falls mainly on businesses while GST falls on every consumer.

He did leave room for change. Specific cases of double taxation under SST can be fixed through amendments, he said, adding that the system can be kept with one or two adjustments, DayakDaily reported.

Malaysia introduced GST at 6% on April 1, 2015. It was abolished in 2018 and replaced by SST from Sept. 1 that year, Focus Malaysia has reported. Anwar first tied a GST return to a RM4,000 income threshold at a Finance Ministry assembly in June 2025, and Deputy Finance Minister Liew Chin Tong repeated the condition in July, tying it to the median monthly wage, Media Selangor reported.

That threshold remains some way off. Data from the Department of Statistics Malaysia showed the national median monthly wage for formal-sector employees at RM3,167 as of December 2025, according to a July report carried by Newswav. Kuala Lumpur, at RM4,391, was the only area cited above RM4,000.

Borrowing falls, spending climbs

Anwar used the same session to defend the government's fiscal record. New federal borrowing fell from RM100 billion in each of 2021 and 2022 to RM92.6 billion in 2023, RM76.8 billion in 2024 and RM75.6 billion in 2025, he said, according to The Star. Over the same period, he said, outlays continued to rise.

He cited RM16 billion for the Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah cash-aid programs, RM18 billion for civil-service pay increases and more than RM40 billion for fuel subsidies. Together those three items, about RM74 billion, come close to the RM75.6 billion the government borrowed last year.

The deficit has narrowed from 6.4% of GDP in 2021 and is projected at 3.3% in 2027, Anwar said. He put the federal debt-to-GDP ratio at 65.2%, falling to 64% in 2026 and 63.7% in 2027. The broader ratio of federal debt and liabilities to GDP eased to 80.7% of GDP at the end of June 2026 from 80.9% at the end of 2022, he said.

The 3.3% projection also has to absorb the income tax relief for households in the 2027 budget. The Public Finance and Fiscal Responsibility Act 2023 commits the government to bring the deficit below 3% of GDP and federal debt below 60% over the medium term, according to the Newswav report on Liew's July remarks.

What it means for markets

Thursday's remarks take a broad consumption tax off the table for now. With the median wage about RM800 short of the threshold, a GST return would need wage growth well beyond recent trends, so any extra revenue will have to come from the existing SST base.

For bond investors, the question becomes how much the promised SST fixes and spending discipline can deliver against a projected 3.3% deficit in 2027, with fuel subsidies alone running above RM40 billion.

The legal targets give the yardstick: a deficit under 3% and debt under 60% of GDP, against Anwar's projection of 63.7% debt in 2027.