Balance taxes to boost local food production

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THE recent debate on whether imported fruits, including apples oranges and avocados, should be subjected to the Sales and Service Tax (SST) has sparked strong reactions among Malaysians. While some argue that the move will raise the cost of living, others believe it’s a step in the right direction to support local farmers.

But the bigger question is this: How can we design a tax system that supports both our farmers and everyday consumers?

Let’s start with the basics. Taxes on food affect what we eat, how much we pay, and where our food comes from. If not carefully managed, they can make nutritious food more expensive and create an unfair advantage for imported goods over locally-grown produce.

Right now, the government is considering imposing SST on imported fruit. While this might be bad news for consumers, there’s another side to the story. By taxing imported fruits, the government could give local fruit farmers a better chance to compete. Many local farmers struggle with rising costs and low prices, especially when cheaper imported fruits flood the market.

To balance the impact, the government can introduce targeted support for local farmers. This includes tax exemptions for locally-grown produce (which Malaysia already applies), as well as tax deductions for farm expenses such as seeds, fertilisers, water, and equipment.

Small and medium-sized farms could also benefit from subsidies or grants to modernise operations or adopt sustainable practices like organic farming.

Urban farming should be encouraged in cities. Imagine more Malaysians growing vegetables on rooftops or in community gardens. These urban farms could reduce the need for imported food and provide fresher options closer to home.

To support this development, the government could offer tax incentives and simplify regulations for urban farming businesses.

At the same time, consumers need to be part of the solution. Public campaigns can raise awareness about the benefits of buying local – such as getting fresher produce and supporting the rural economy.

Farmers’ markets and community food programmes can also create strong links between consumers and local producers.

Restaurants and grocery stores could even receive tax breaks for sourcing ingredients locally.

But to truly protect low-income households, the cost of essential food items must remain affordable. Basic items like rice, cooking oil, and vegetables should either be tax-free or taxed at a lower rate to ensure every Malaysian has access to nutritious meals.

Critically, the tax system must be fair and transparent. It shouldn’t favour large importers over small farmers, nor should it punish consumers who want to eat healthily.

The goal is not to make food more expensive but to build a system that supports local production, reduces dependency on imports, and strengthens our food security.

As the government weighs the issue over whether to include imported fruits under SST, the debate offers a chance to rethink how we use taxes to shape the food system. With careful planning and balanced policies, we can protect both our wallets and our farmers, ensuring that good and affordable food is always within reach.

AHMAD NIZAM CHE KASIM

Faculty of Business and Communication

Universiti Malaysia Perlis