PETALING JAYA: Retailer associations are urging the government to reconsider imposition of a luxury tax because it would be bad for the country.
In a joint statement, the groups said the tax would make Malaysia non-competitive and make the country less attractive for tourists.
They said the tax could also drive Malaysians to go overseas to buy luxury goods.
"This is a lose-lose situation because it discourages Malaysians from shopping locally and discourages international tourists from visiting.
"Even if a mechanism can be designed for foreign tourists to claim back these luxury taxes, Malaysians would still be forced to do their shopping overseas," read the joint statement issued on Sunday (March 5).
It was jointly issued by the Malaysia Shopping Malls Association, BBKLCC Tourism Association Kuala Lumpur, Batu Road Retailers Association, Bumiputra Retailers Organisation, Federation of Malaysia Business Associations, Industries Unite, Malaysia Retailers Association and the Malaysia Retail Chain Association.
They said that only luxury items should be taken into account if the government decides to move forward with the new tax.
They claimed that big-ticket items like racing cars, motorcycles, yachts, and aircraft might be taken into account.
The retailers said the government should also take a holistic view that balances risks, rewards and the flow-through multiplier effect of business activities that contribute to the economic growth of the nation.
"We urge the government to thoroughly consider the full range of wealth taxes, capital gains taxes, and luxury taxes to make sure that they don't discourage entrepreneurship or even cause enterprising individuals and companies to move outside of Malaysia, leaving a brain drain loss in their wake." they added.
In Budget 2023, Prime Minister Datuk Seri Anwar Ibrahim announced a luxury goods tax for certain luxury brands, like watches and fashion goods, that would be implemented as part of the government's efforts to tackle the country's current rising cost of living issue.
