When scrapping the HVGT is akin to sparring Chanel, LV, Rolex while the poor squeezed with expanded SST

Focus Malaysia

7 days ago

WHO can blame man-on-the-street Malaysians who are struggling to cope with escalating cost of living following an expansion to the Sales and Service Tax (SST) scope for being infuriated by news that the Madani government has ditched plan for luxury goods tax tailored for the ultra-rich?
This came about after the Finance Ministry confirmed via a written parliamentary reply on Tuesday (July 29) that the government has decided not to proceed with imposition of the high-value goods tax (HVGT) which is fixed at 10%.
The given rationale is that elements of the HVGT – which implementation has been delayed since its May 1, 2024 target date – have been incorporated into the revamped sales tax regime where luxury and discretionary items are now taxed at rates of 5% or 10%.
To ordinary Malaysians, complexities of the taxation system is perhaps beyond their comprehension. What is obvious though is that such hot potato notion that commoners remain squeezed while the ultra-rich are spared would be rapidly politicised by detractors.
Bersatu information chief Tun Faisal Ismail Aziz lambasted the fact that while the HVGT has been scrapped in view of its overlap with SST, the Low Value Goods Tax (LVGT) which came into effect on Jan 1, 2024 is still being imposed side-by-side the SST.
'Regardless, the abolition of HVGT doesn't solve the problem of rising SST rate and SST scope expansion which has resulted in 97% of goods and services that were previously tax-exempted are now taxed by the Madani government,' he reacted on his Facebook page.
'What the people want postponed or abolished are increases in the SST rate and its scope expansion as well as rises in electricity tariff and petrol prices of oil, notably RON95 and diesel, which have resulted in spiralling cost of business operations and living expenses.'
Renegade UMNO member Isham Jalil pointedly asked 'who does the government want to protect – the common folks, the tycoons or the super-rich?'
'It should be luxury goods for the super-rich that need to be taxed more, not taxed at the same rate as goods meant for ordinary Malaysians,' countered the former UMNO supreme council who was fired from the party on Dec 7, 2023 for opposing the party's collaborations with DAP in elections.
'This government used to say that only the T15 super-rich had to pay more. But until now the government has not detailed out the definition of T15 and who the super-rich are.
'Instead, the SST tax was expanded, the government collected RM50-60 bil a year and on average the people had to pay more while various subsidies were withdrawn.'
All in all, as argued by tax-savvy governance advocate ksampoh@MyOwn Inc (@ksampoh), it is important to understand that the HVGT which is set at 10% 'is not intended as a penalty for affordable goods'.
'Rather, its purpose is to create a level playing field for Malaysian retailers who have historically faced stiff competition from overseas e-sellers that operated without tax obligations,' he clarified on X in response to a post by former Barisan Nasional (BN) strategic communication deputy director Datuk Eric See-To.
The former lieutenant of now incarcerated former premier Datuk Seri Najib Razak who also goes by the nom de plume Lim Sian See was accused as having distorted facts and failing to recognise the difference between established tax principles and sensationalised narratives that may mislead the rakyat. – July 31, 2025
Madani scrapped the luxury goods tax (HVGT) after introducing the low-value goods tax (LVGT) at 10% in early 2024. The MOF claims luxury items are now taxed under SST at 5% or 10%.
Here's the joke: cheap goods get hit with a 10% tax, but 'luxury' items supposedly get 5% or 10%.… pic.twitter.com/0U9q3xpJkR
— Eric SeeTo Lim Sian See (@LimSianSeeEric) July 30, 2025