Buyers: Gold trinkets a savings tool, not a luxury

Marina look for jewellery at a goldsmith stores in kuala Lumpur. — ONG SOON HIN/The Star

GEORGE TOWN: The time is not conducive now to enact new legislation to tax certain luxury items such as jewellery.

Muslim Jewellers and Money Changers Association Penang president Datuk Dr Anvar Hussein Rahumathullah said the tax would be a burden to the people’s savings.

“Jewellery is more of an investment and savings instrument for many people. They do not wear jewellery every day.

“With the holding price already increasing by RM20 per gram within 10 days, this will bring difficulties to the people,” he said when contacted by The Star.

Anvar said the price of gold is expected to go up with the Palestinian crisis.

“Jewellery cannot be considered luxury items like watches or expensive cars.

“If the government presses on with its decision, goldsmiths would face problems as many buyers would go to neighbouring countries like Singapore and Thailand to get gold.

ALSO READ: Luxury set to be more expensive

“When this happens, our revenue will go down, and our money will flow to neighbouring countries, creating a huge domino effect on the economy of our country,” he said.

He also said many businesses were still recovering, although the Covid-19 pandemic had waned.

In Kuala Lumpur, Malaysian Indian Goldsmith and Jewellers Association president Datuk Abdul Rasul Abdul Razak said a low tax threshold on gold would also hurt the businesses of local gold retailers.

He said this was due to the small purchases by B40 and M40 groups making up the bulk of business for local gold retailers.

“They usually make small purchases of around RM1,000 for 4g to 5g of gold, as a small investment or emergency savings, and as it is extremely rare for people to purchase large amounts of gold at once.

“Taxing these small purchases could discourage B40 and M40 from investing in gold, which could potentially reduce the business of gold retailers by around 70% and cause them to shut down,” he said.

He proposed the gold threshold be set for purchases of at least RM50,000 and above, which he said were usually bought for luxury purchases.

ALSO READ: ‘Set high price thresholds for certain goods’

Mohamad Shaifudeen Mohamed Sirajudeen, the chief executive officer of SMS Deen Jewellers, said gold has become a safe haven due to instability and high inflation caused by recent world events.

“With seeming uncontrollable inflation caused previously by the Covid-19 pandemic and now ongoing wars, gold has become a necessity, which many have realised is a much safer place to invest in as a form of financial security.

He also said that gold’s increasing popularity was also due to the ease of converting it to cash during financial emergencies.

Meanwhile, in Klang, Meenal Jewellers managing partner S. Puspanathan said it would be better for the government to impose a goods and services tax starting at 3% instead of imposing a luxury goods tax ranging from 5% to 10%.

“The 5% to 10% tax is very high, and it will make gold jewellery out of reach for many people as the price of gold is already very high,’’ he said.

Puspanathan also concurred that gold was an important cultural element for the Indians from birth to marriage.

“Not only will it be out of reach for many Indians now, but it will also affect our business with tourists who come here specifically to buy jewellery,’’ said Puspanathan.

Goldsmith and director of S. Nadarajah Pather & Son Jewelry & Gems Sdn Bhd, S. Kughaan, agreed with Pushpanathan that goldsmiths would be badly affected by the new tax.

“Let’s say I currently have 1,000 regular customers.

“The numbers will go down by at least 50% to 60% with the imposition of the luxury goods tax,’’ said Kughaan.

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