PETALING JAYA: A reasonable rate must be set for the proposed luxury goods tax, says an industry player.
Malaysia Retailers Association (MRA) and Sogo Group deputy chairman Datuk Andrew Lim said a tax rate of 5% would be acceptable.
Lim also said that the MRA has been lobbying the government to establish a price threshold for taxing luxury goods.
“What we consider luxury now is not the same as 20 years ago,” added Lim.
The MRA had proposed that the luxury goods tax be imposed on foreign tourists and not Malaysians.
“Because the ringgit is weak, some 37% of the foreign tourist expenditure is on shopping.”
However, Lim also said there was opposition among the MRA members against the proposed luxury goods tax, as it would send the wrong message to international tourists.
“There are also those who believe that without the luxury goods tax, there will be more tourists, and you will gain in terms of economic benefits,” added Lim.
Meanwhile, several luxury goods retailers in Kuala Lumpur are bracing for the implementation of the tax.
“Many people are rushing to buy handbags, shoes and watches because the luxury goods tax rate could be high,” said a saleswoman known as Ika.
Datuk Irwin Cheong said that Industries Unite, which is a coalition of local associations, isn’t opposed to the implementation of the luxury goods tax but said the term “luxury” is broad.
“The definition has to be well-defined. We urge government officers to set up a committee with industry players to understand this further before any implementation,” said Cheong, who’s the co-founder of Industries Unite.
Cheong said luxury goods sales may not affect the tourism industry, but they contribute to the economy as they draw more foreign spending to the country.
Bumiputra Retailers Organisation president Datuk Ameer Ali Mydin said the tax would be counterproductive to the tourism industry.
He said it would create the perception luxury goods in Malaysia are more expensive.
“We will lose tourist dollars. For example, in Singapore, they have a high Goods and Services Tax of 8%. People who wanted to buy luxury goods went to Hong Kong. We’re concerned that this could also happen in Malaysia when the tax is implemented,” he said.
