SST Takes Effect in Malaysia on Sept 1
The new Sales and Service Tax (SST) will come into effect in Malaysian on September 1 this year, after the Goods and Services Tax (GST) was zero-rated on June 1. Following this, the price of goods dropped by at least six per cent once the zero-rated GST system kicked in. Prime Minister, Tun Dr Mahathir Mohamad, said his administration was now focusing on the country’s finances with an eye on delivering Pakatan Harapan’s 100-day pledges. “We have made our promises in our manifesto, and we had expected to fulfill our promises in 100 days. “The situation however is worse than we expected when we prepared the manifesto. The promises we made will be fulfilled but after taking into account the financial situation, and so that it won’t affect the country’s administration,” he said.
Lowering The Price of Goods and Services
According to the Chairman of the Council of Eminent Persons, Tun Daim Zainuddin, the SST system to be introduced will “somewhat be an updated version” with the ultimate goal of lowering the price of goods and services for the people. “There will be no immediate need to introduce any new taxes, nor increase the personal income tax or corporate tax rates at this juncture,” said Daim, adding that economics was a very complex subject and could not be looked at from a single perspective. The former finance minister said the tax would be capable of raking in sufficient revenue to make up for the loss of proceeds from the abolition of the Goods and Services Tax. “The Royal Malaysian Customs Department has already given me a preliminary report. Revenue may be less than RM5.0 billion but oil prices are increasing steadily. The (2018) Budget was worked out on the premise that oil prices would hover around US$52 (RM207) per barrel but now it is fetching about US$70 (RM279) per barrel. Last week, it was US$80 (RM319) per barrel. For every US$1 (RM3.99) movement, we will earn RM300 million to cover our shortfall,” explained the 80-year-old who was once the economic advisor to the government in the 1990s. On doubts raised as to whether goods and services would be cheaper after the re-introduction of the SST, the diminutive tycoon said the value of the ringgit would impact the price of goods, the bulk of which are imported. This situation can be overcome with the people placing more trust in the government, he added.