B40 not affected by SST expansion

Sinar Daily

a day ago

The expansion would primarily impact the wealthy group or those who could afford to spend lavishly and own luxury goods.
The low-income group or B40 will not be affected by the expansion of the Sales and Services Tax (SST) scope that will be implemented starting July 1.
SHAH ALAM – The low-income group or B40 will not be affected by the expansion of the Sales and Services Tax (SST) scope, which will take effect from July 1.
Instead, the expansion would primarily impact the wealthy group or those who could afford to spend lavishly and own luxury goods.
UniKL Business School economist Associate Professor Dr Aimi Zulhazmi Abdul Rashid, the expansion represented a more targeted consumption tax and would not be imposed on all income groups.
'This SST is imposed on those who are able to own luxury goods and spend in line with their income. This time, its expansion is more targeted and not general.
'In other words, it is for those with the capacity to make large expenditures,' he told Sinar on Tuesday.
Previously, the government adopted a targeted approach in the implementation of the revised Sales Tax (ST) and the expansion of the Services Tax (ST) scope to ensure the public is not burdened when the tax is implemented starting July 1.
Finance Minister II Senator Datuk Seri Amir Hamzah Azizan said the tax review aimed to strengthen the country's fiscal position by increasing revenue and broadening the tax base. Finance Minister II Senator Datuk Seri Amir Hamzah Azizan. Bernama FILE PIX
Meanwhile, Aimi said the country's domestic economy remained strong despite global economic challenges and therefore, the government's additional revenue target of RM5 billion was not difficult to achieve.
'The SST scope expansion is actually approaching the scope of the previous Goods and Services Tax (GST).
'And based on the continuous strength of the domestic economy, despite global economic headwinds, achieving the additional revenue target of RM5 billion is not an issue,' he said.
However, Aimi explained that the SST expansion carries the risk of putting pressure on the current inflation rate, which is now at 1.4 per cent.
He said this happens when the additional cost resulting from the tax is passed on by producers to consumers and businesses at the end of the supply chain.
'The expansion of the SST scope poses a risk of increasing the current inflation rate of 1.4 per cent.
'This is because the increase will be passed down by producers through the supply chain of goods and services to consumers and end businesses,' he said.
Nevertheless, Aimi emphasised that the inflation rate increase is expected to remain under control as the tax does not involve daily necessities used by the majority of people.
'However, the rate increase will likely remain manageable. It may only rise slightly as it mostly involves high-value luxury goods, not essential items like food and beverages,' he said.
INFO
Types of services subjected to tax:
Rental or leasing services (8 per cent)
Beauty services (8 per cent)
Educational services (6 per cent)
Healthcare services (6 per cent)
Educational services (6 per cent)
Financial services (8 per cent)
Construction work services (6 per cent)
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