KUALA LUMPUR: Improving the Sales and Service Tax (SST) was an immediate step that allowed the government to focus on existing approaches to increase revenue and strengthen the country’s fiscal position, says Finance Minister II Datuk Seri Amir Hamzah Azizan (pic).
At the same time, it would not burden the people.
By improving the current tax system, he is confident the government could overcome certain leakages, which would help it achieve its fiscal target.
“The important thing is that, in addition to the government’s ability to use existing ‘tools’ to deal with problems almost immediately, we also look for ways to reduce leakage in the existing system.
“Targeted subsidies are one of the most important focuses for the government because we have to reduce leakages and expenses in the current system,” he said during Question Time at the Dewan Rakyat yesterday.
He was replying to Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal (PN-Bukit Gantang) regarding the possible re-implementation of the Goods and Services Tax (GST), reported Bernama.
Amir Hamzah explained that GST does have a broad base, but it has a direct impact on the people, contrary to the aspirations of the government which takes a more progressive approach as a measure to increase the national income through several taxation reform measures.
The service tax component under the SST system was raised to 8% from 6% starting March 1, except for food and beverage services, telecommunications and the provision of parking spaces.
“The move to exclude services such as food and drink is progressive, which reduces the impact of tax increases on the cost of living of the people,” he added.
When asked about logistics services that are now subject to the rate hike, he 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 5% and 10%.
He added that the HVGT will be imposed based on a specific threshold value set for each item involved and that it is progressive because it is imposed on those who can afford high-value items while not burdening the low- income group.
