KUALA LUMPUR: The government is expected to collect an additional RM3bil in revenue through the wider scope and increase in the sales and service tax (SST), says Datuk Seri Anwar Ibrahim.
The Prime Minister also said that the increase in SST did not have a significant impact on inflation following the increase from 6% to 8% beginning March 1.
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According to him, the tax focuses more on discretionary service-related activities and inter-business activities that "involve the public less directly".
"Expenses for food and beverages and telecommunications have not increased and remain at 6%. Expenses for utilities such as water and petrol remain untaxed (by SST).
"The government has also taken steps to reduce the incidence of double taxation such as for the logistics sector," he said during the Ministers’ Question Time in Dewan Rakyat on Tuesday (March 26).
Anwar was responding to a question from Datuk Mohd Shahar Abdullah (BN-Paya Besar), who inquired about the impact of the SST increase on the cost of living and production costs for industries, as well as the additional revenue collection from the implementation of all new taxes for 2024.
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Anwar, who is also the Finance Minister, noted that the adjustments made to the service tax policy, particularly the uptick in service tax rates, have had minimal impact on inflation, estimated at approximately 0.2 percentage points.
He said these policy alterations exclusively pertain to service tax, with no changes to sales tax in terms of scope and rate, and added the coverage of service tax is narrow, affecting only 41% of the total array of services within the economy.
Additionally, he stated that the number of service providers is relatively modest, totalling around 60,000 entities registered with the Royal Malaysian Customs Department.
He also said numerous crucial services are exempt from SST, including education, healthcare, land and sea passenger transportation, air passenger transportation for rural air services in Sabah and Sarawak, prepaid telecommunications for citizens, food and beverage delivery, water supply, electricity supply for residential premises consuming below 600kWh (kilowatt-hour) per month, and electricity supply for business premises.
