‘Proposed luxury tax is to broaden govt’s revenue base’

Datuk Seri Mohamad Hasan. - Filepic/The Star

SEREMBAN: The proposed luxury tax was, among others, to allow the government to broaden its revenue base and continue providing subsidies to the people, says Umno deputy president Datuk Seri Mohamad Hasan.

“This tax is only for those with high purchasing power.

“It will not be imposed on essential items but only on those buying items considered luxurious. In short, it will not impact the society at large,” he said.

Mohamad, who is also Defence Minister, said as long as it did not have a negative impact on the food, education, services and health sectors, the luxury tax would not be a burden to Malaysians.

“If someone wants to buy a Ferrari or a luxury watch for example, he or she certainly has strong purchasing power.

“In short, it is only for those who can afford it,” he said.

Mohamad explained that such taxes were necessary as the government did not have a large revenue base.

He said the government’s operational expenditure and subsidies have also continued to increase and efforts should be made to increase its income without burdening a large section of Malaysians.

The government’s proposal to introduce the luxury tax was also in line with its decision not to re-introduce the goods and services tax for now, Mohamad added.

He said the Customs Department should come up with a list of items categorised as luxurious so that it would not create unnecessary concerns among the people.

“Customs must define what constitutes a luxury item as many questions are being asked about this.

“Once we have a clearer picture, people will be more accepting of the proposal as the government will be able to continue with its policies to help, especially those in the lower income category,” he said.

On concerns by tourism and retail groups that the proposal will derail all past efforts and policies by the country to position itself as a tourist-friendly, shopping paradise, Mohamad said this is a non-issue.

He said the Customs Department could look at how best this could be done, as a similar tax system has also been implemented in many countries.