KUALA LUMPUR, March 5 — Improvement the sales and service tax (SST) is an immediate step which enabled the government to focus on existing approaches to increase revenue and Malaysia’s fiscal position, while simultaneously not burdening the people, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He is confident that by doing so, the government can overcome certain leakages which would help achieve its (fiscal) target.
“The important thing is that besides the government’s ability to use the existing ‘tools’ that we can deal with almost immediately, we also look for ways to reduce the existing system’s leakages.
“Targeted subsidies is one of the most important focuses for the government because we have to reduce leakages and expenses in the current system,” Amir said during a question-and-answer session in the Dewan Rakyat today.
He was responding to Bukit Gantang MP Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal’s query on the possible re-implementation of the Goods and Services Tax (GST).
Amir said the GST does have a broad base, but has a direct impact on the people, contrary to the government’s aspirations which takes a more progressive approach to increase the national income via several taxation reform measures.
The service tax component under the SST system was raised to eight per cent from six per cent starting on March 1, except for food and beverage services, telecommunications, and the provision of parking spaces.
“The move to exclude services like food and drink is progressive, which reduces the impact of tax increases on the people’s living costs,” he said.
When asked about logistics services that are now subject to the rate hike, Amir said: “We do not impose any tax in areas where there is mediation… business to business (B2B).
“So if there is no B2B, no tax is charged in the context of the existing structure. For exporting companies, we do not impose SST so as not to pressure the existing economy,” he said.
At the same time, the government is also enacting new legislation to implement the High-Value Goods Tax (HVGT) at five per cent and ten per cent.
Amir added the HVGT would be imposed based on a certain threshold value set for each item involved and is also progressive as it is imposed on those who can afford high-value items and does not burden the low-income group.
— Bernama
