Malaysian Prime Minister Najib Razak on Thursday defended introduction of a new consumption tax and cut of sugar subsidy, saying the decisions are essential to consolidate public finance and strengthen the national economy.
Speaking at the opening ceremony of Malaysia's ruling United Malays National Organization (UMNO), Najib slammed the opposition for distorting the Goods and Service Tax (GST), which is to be implemented in 2015.
"For your information, GST has been proved to be the best tax system so far, and must be implemented for us to remain comparative, he said.
Najib stressed that the necessary goods and services would be exempted from GST, such as rice, sugar, salt and cooking oil.
The introduction of GST is part of the efforts by Najib's government to tackle the mounting debt pressure. According to an official economic report, the total federal government debt would increase to 54.8 percent of GDP by the end of 2013, inching toward the 55-percent debt ceiling.
The government also decided to raise petrol price, abolish subsidy on sugar and increase the electricity tariff.
Najib argued that the government is having a subsidy rationalization. On the cancellation of sugar subsidy, he said one of the aims was to tackle public health problem, as statistics show that 2.6 million Malaysians aged 30 or above suffer from diabetes.
"In short, all the efforts in the rationalization of subsidy are initiatives for fiscal consolidation, which the government must implement to strengthen the resilience of the national economy," he said.