PETALING JAYA: A public policy analyst suggested that reintroducing the Goods and Services Tax (GST) after the next general election would be timely for strengthening federal finances.

Taylor's University pro vice-chancellor for external engagement Prof Ong Kian Ming said this could help rebuild government coffers as debt servicing costs continue to climb.

Malaysia's debt servicing ratio is projected to reach 17 per cent next year, breaching the 15 per cent threshold of government revenue.

Ong, a former deputy minister of international trade and industry, said debt obligations will continue to rise.

He said allocations for emoluments, retirement charges and debt servicing are projected to climb to 62 per cent of the government's operating expenditure next year, compared with 55 per cent in 2022.

With the possibility of a general election being called next year, Ong said the government could focus on reviving the GST as part of efforts to restructure its finances.

"Maybe that's something we can do after the next general election, which could be as soon as 2026," he said during a panel session on the 2026 Budget organised by Hong Leong Bank.

Ong said the tax could be introduced at a lower rate to make it more "palatable" to consumers.

"Revenue will take a hit, but you can also increase the level of subsidy savings. For example, after the general election, by reducing the quota for the Budi Madani RON95."

PwC Malaysia tax partner Ang Wei Liang said the previous GST regime "failed" due to "a trust deficit spiral".

"From the Finance Ministry's perspective then, the amount of GST refunds they had to pay out was way higher than what was projected, so they withheld the refund. Businesses were affected because it impacted their cash flow, so they priced in GST into their operations. This is what I call a trust deficit spiral," he said.

Ang said the implementation of e-invoicing is likely to facilitate the eventual reintroduction of GST.