KUALA LUMPUR: The proposed list of taxable goods and services under the Sales and Service Tax regime released, should be less burdensome to the public than Goods and Services Tax (GST), thanks to exemptions for most of the food and essentials and retailers no longer charging the 6% for goods.
Among the goods and services that were subjected to GST but will be exempted from SST are, medical insurance, motorcycles below 250cc, infant formula milk, doctor's consultation fee at private hospitals, sardine, theme park and cinema tickets, bank transaction fee, maintenance services and spectacles frame.
SST will only be charged on businesses that earn more than RM500,000 annually. The threshold for businesses under the GST was different for different industries.
According to K-Konsult Taxation Sdn Bhd managing partner Koong Lin Loong, this time around, food truck and hawkers, who earn more than RM500,000 annually, will charge a service tax of 6%. Under the GST regime, those in the food business need only charge the 6% rate if they earn more than RM3 million annually.
The Customs Department today uploaded multiple documents on the lists goods and services exempted from the tax along with frequently asked questions to explain its implementation.
According to Finance Minister Lim Guan Eng in a statement today, only 38% of the goods and services in the basket of goods used for the Consumer Price Index will be taxed under the regime, compared with 60% under the GST.
The basket comprises of 552 items chosen based on the current patterns of consumer expenditure.
While the SST is expected to have an impact, it is expected to be half of that of the GST. Explaining this, Lim said the projected collection for the SST next year is RM21 billion whereas the GST would have raked in RM44 billion in 2018.
In that light, he said RM23 billion will be returned to the consumer market, taking away the tax burden from the people and easing the high cost of living. This, in turn, will spur economic growth by stimulating consumer demand and raising business optimism.
Earlier during the Minister's Question Time, Lim admitted that the GST is a more transparent and efficient system for the government to collect taxes.
“If it is favourable to the government but burdens the people, then we are not a people's government,” he added.