SST revision won't hurt govt's RM10bil collection target, says economist

Free Malaysia Today

8 hours ago

On Friday, the government announced that imported apples, oranges, mandarin oranges and dates will be exempted from the SST. (Envato Elements pic)
PETALING JAYA : The revision of the sales and service tax's (SST) expansion to exempt several goods and services will not jeopardise the government's target of collecting up to RM10 billion a year, says an economist.
Geoffrey Williams said the government has been responsive to views from the relevant stakeholders, and is committed to reducing financial burdens without harming the country's fiscal capability.
Geoffrey Williams.
'The revision is minor and will not greatly affect overall collections.
'The government should still be able to hit its RM5 billion collection target for the last six months of 2025 and RM10 billion for next year,' he told FMT, adding the revision will also help control inflation and consumer spending patterns.
On Friday, the government announced that imported apples, oranges, mandarin oranges and dates will be exempted from the SST. Also exempted are beauty services such as manicures, pedicures, facials and hairdressing.
The finance ministry also said the threshold for service tax registration for leasing or rental and financial services had been raised from RM500,000 to RM1 million, to reduce the number of small businesses that would be affected.
Williams said the revision is in line with the government's long-term goal to increase national revenue and strengthen basic health, education and social protection services without unduly burdening consumers.
'This is not just a question of tax collection, but of responsible and fair fiscal policy implementation,' he said.
Carmelo Ferlito.
However, Center for Market Education CEO Carmelo Ferlito said the government must address potential weaknesses and leakages arising from confusion over the tax's implementation, especially in relation to the newly-exempted goods and services.
He said the tax must be simple and fair, warning that making it overly complex would only cause more problems.
Ferlito also called for the government to control its own spending to avoid the inflationary risks associated with SST.
'Taxes do not cause inflation, government spending does.
'If the government is truly serious about implementing reforms to reduce the burden of the cost of living on the people, it must impose limits on its own expenditure,' he said.