Malaysia to impose consumption tax, abolish sugar subsidy

Malaysian Prime Minister Najib Razak on Friday unveiled plans to impose a 6-percent consumption tax and abolish a sugar subsidy, as his government aims to cut the budget deficit. Najib said the government aims to cut the budget deficit to 4 per cent of the gross domestic product (GDP) in 2013 and 3.5 per cent of GDP in 2014. Malaysia recorded a budget deficit of 4.5 per cent last year.
The Goods and Services Tax (GST) will go into effect in 2015 and the sugar subsidy will be abolished on Saturday. "The Government will do what is right for our economy," he told the parliament, presenting the 2014 budget of 264.2 billion ringgit (85 billion dollars). "Some measures may not be popular now, but over the medium term what is good for the economy is also good for the people," he added. Najib said he expected the economy to grow between 5 per cent and 5.5 per cent in 2014, up from the projected 2013 growth of between 4.5 per cent and 5 per cent.