Taxes should prioritise people’s overall well-being

TAXES are never popular.

So, it’s not surprising that the recent expansion of the sales and service tax (SST) has ignited concern across Malaysia.

On June 9, the government announced a targeted review of the SST rate, which would take effect from July 1.

The tax rate would remain the same for essential goods, while a rate of 5% or 10% will be imposed on non-essential or discretionary goods.

It was presented as a measure targeting luxury items.

But the problem is, one person’s luxury might be another’s staple.

Going by the updated list of what’s taxable, the SST could have a broader impact than most thought, raising concerns about an escalation in the cost of living for everyday Malaysians.

The government has previously indicated it is open to reviewing policies, especially when a lot of people raise concerns – and with the number of people worried about this tax, it would do well to make sure to review it and ensure it does not inadvertently place an undue burden on those who can least afford it.

The expanded SST encom­passes a diverse range of neces­sities and services, not only ­premium goods, such as salmon and avocados.

It includes wedding rentals and catering, as well as traditional medicine, postnatal massages, elderly care and beauty treatments – services often seen as fundamental life events or crucial support rather than mere indulgences.

Adding to the apprehension, the expansion removes tax exemp­tions on some basic food items.

Items like mangoes, apples, oranges, dates, sauces, spices, canned fruits and instant food, which were previously exempt, will now incur a 5% tax.

This change is expected to increase food prices in markets, restaurants and homes alike.

The number of taxable items has increased from fewer than 1,000 to over 4,000 sub-codes, while the list of exempt items has been cut by 70%.

So the new tax will obviously have a wide-ranging impact on people’s daily lives.

The announcement on Thurs­day by Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi that the government will review the implementation of the SST on selected imported goods, including common fruits such as apples and mandarin oranges, is a highly welcome development.

The government’s willingness to re-examine the policy is a positive step towards ensuring that taxation genuinely serves its purpose without disproportionately affecting the vulnerable segments of society.

Taxes are unavoidable in modern civilisation and no country can function without them.

And, Malaysia certainly cannot continue to live with increasing budget deficits every year.

But the government must balance between increasing revenue collection and making sure the people don’t suffer unnecessarily.