PETALING JAYA: The fiscal reform initiative is already under way, the Ministry of Finance (MoF) said today, adding that revenue shortfall resulting from the removal of the Goods and Services Tax (GST), which is to be zero-rated effective June 1 2018 in the initial stage, will be cushioned by specific revenue and expenditure measures that will be announced later. “The Sales and Service Tax (SST) will be reintroduced. Expenditure reduction will begin with rationalisation, efficiency measures and reduction in wastages,” it said in a statement. Of significance, MoF said, oil prices have been higher than the US$52 per barrel estimated for Budget 2018. “This provides fiscal buffers for the immediate future. Fiscal responsibility, transparency and governance will be a paramount consideration in rolling-out the fiscal reform.” Meanwhile, Moody’s Investors Service views the scrapping of GST as credit negative if it is implemented without offsetting measures. Vice-president and senior analyst, sovereign risk group, Anushka Shah said while revenue losses this year will be offset to some degree by higher oil prices, this development is unlikely to be a structural – or act as – a permanent substitute for GST itself. “The extent to which offsetting measures, if any, will help recover the revenue loss from GST will allow us to determine the exact impact on Malaysia’s fiscal position going forward. However, if GST is eliminated, it would increase the government’s reliance on oil-related revenues and would also narrow the tax base,” he said in a statement today.