Selangor Journal

What to expect from the reintroduction of SST

Photo taken from The Edge Market

By Syauqi Jamil

PUTRAJAYA: The Sales and Services Tax (SST) are set to be reintroduce this weekend to replace the infamous Goods and Services Tax (GST), as an alternative source of revenue for the government.

Dubbed as the less efficient but more people friendly tax, so what can Malaysians expect from this taxation system that was exhumed by the Pakatan Harapan administration.

Based on the media briefing on SST conducted earlier by Finance Minister Lim Guan Eng himself, below are several highlights that will or may be taking place after September 1.


 5,443 goods exempted from SST

Aimed to cut down high cost of living factor that’s been troubling Malaysians, a total of 5,443 consumer items will be exempted from SST.

This is 10 times the number of tax-free items in compared to GST, which only exempted 545 consumer goods when it was introduced by the previous Barisan Nasional (BN) government in April 2015.

Lim said the current list of consumer goods and services subject to SST were mostly based on the old SST list but differs in terms of threshold increment as well as additional exemptions.


 Rate could be lowered, zero rated possible

Under the SST, consumer goods will be taxed between 5% to 10% while services will be taxed at 6%.

793 goods is categorized under the 5% tax bracket while 5,612 items will be taxed 10%. 25 categories of services was also listed under those that the 6% tax will be imposed to.

Although the rate has been fixed, Lim pointed out that it may be lowered in future.

He said there will be shifts in the coming days, where items under the 10% tax bracket may be relocated under 5% tax bracket, and 5% tax bracket may be reduced to 0% tax.


 Exemption list to be revised as SST discussion and review continues

Putrajaya will continue its discussion with businesses and relevant parties within the country even after its implementation this weekend.

This is so that the government can gain feedbacks regarding the taxation system where the list of exemptions can be improvised over time.

Admitting that SST implementation was ‘rushed’, Lim said the government had no choice but to implement the tax the soonest to avoid operating expenditure deficit.

Should this happen, Malaysia will be short of RM4 billion collected revenue, which isn’t enough to cover operational expenditures like civil servant salaries and maintenance works.


Price hikes likely but lesser impact

Lim gave no guarantee that the implementation of SST will not cause a ripple of price hikes on certain goods.

Despite this, Lim confidently said that the impact in compared to GST will be ‘less than half’.

Albeit a RM23 billion lower collection than the GST, it was said that SST collections will be spent on people centric areas to ease high cost of living issues.

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