‘We collect taxes to return them to the people': PM justifies SST expansion, says Malaysians to benefit through welfare aid

PUTRAJAYA, June 20 — Prime Minister Datuk Seri Anwar Ibrahim has today assured the public that his administration's fiscal reform will not compromise the welfare of the majority.
Speaking to Finance Ministry staff, he said that broadening the tax base by expanding the Sales and Services Tax (SST) will instead allow Putrajaya to enhance its assistance and services for Malaysians.
'In Malaysia, subsidies are given to everyone, even foreigners, those who don't pay taxes, and the wealthy earning RM1 million a month receive electricity subsidies,' he said in his speech at the Finance Ministry monthly assembly here.
'What we're doing now is removing those subsidies, making them pay the actual cost while allowing Tenaga Nasional Berhad to earn a reasonable profit. Through this, we save RM4 billion.
'And what is that RM4 billion for? It goes to the schools and hospitals,' he added.
Anwar cited targeted aid initiatives such as the Rahmah Cash Aid (STR) and Sumbangan Asas Rahmah (SARA) as key examples of how public funds are being channelled back to those who need them most.
'What are we collecting billions in taxes for? As everyone knows, the total allocation for STR and SARA amounts to RM13 billion and benefits nine million people.
'So this is our reasoning, we collect these taxes and return them to the people,' he said.
Anwar also said that the Ministries of Education and Health have received increased allocations in the current budget as part of efforts to enhance the country's education and healthcare systems.
'That's why in deciding on this matter, we need to look at it from a macro perspective. If we look at past budgets, there were some good elements, but the significant increase in allocations for health and education reflects our priorities,' he said.
Earlier this month, the Ministry of Finance announced the implementation of revised SST rates and expanded scope of the Service Tax effective July 1, 2025 to strengthen the country's fiscal position by increasing revenue and broadening the tax base.
However, the announcement has since faced criticism from various quarters, with calls to delay its implementation over concerns that it could worsen the cost of living and place additional pressure on small businesses amid fragile economic conditions.

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