Why tax threshold for electricity, but not other sectors - Wee

Editor’s note: The article has been amended after it was pointed out the previous version did not accurately reflect Wee Ka Siong’s statement. The error is regretted.

Wee Ka Siong (BN–Ayer Hitam) has questioned the government’s lack of consistency in the implementation of the service tax hike.

Speaking at a press conference in the Parliament today, he queried why service tax is exempted based on electricity consumption but there is no threshold value set for telecommunication bills.

“Yesterday, Finance Minister II (Amir Hamzah Azizan) announced that water bills will remain exempted from (service tax) and so is domestic electricity consumption of less than 600 kWh (or electricity bills of less than RM220 per month).

“What is weird is that the rest of the services like telecommunications (bills) are subject to a tax rate of six percent.

“Why is there a threshold value set for certain sectors but not others? If there is no threshold value for telecommunications, then we should do away with it,” he told reporters today.

This comes after Amir, in a statement yesterday, said the upcoming service tax hike only affects discretionary services and business-to-business (B2B) activities and does not involve services that are necessities and part of the people’s lifestyle.

For example, services widely used by the people such as food and beverages, telecommunications, and parking remain subject to a service tax rate of six percent.

As for electricity services, the service tax is only imposed on usage exceeding 600 kWh, and nearly 85 percent of electricity consumers in the country are below this threshold and thus are not affected.

The service tax will also not be imposed on treated water services.

Electricity a necessity

However, Wee - who has been insisting on the exemption of water and electricity charges from the increase in service tax - today said it was perplexing that there is a service tax on electricity bills but not water bills when both are necessities.

The MCA president stressed that electricity tariffs have increased several times since last year.

“Why is the service tax for electricity bills still being increased to eight percent?

“Why is the government so adamant in increasing the tax rate for electricity bills? The people are now suffering because of these compound increments.

“The weather is hot these days, many households have turned on their air-conditioners more often and are paying more than RM220 monthly for their electricity bills,” he said.

He also asserted that the increase of the service tax rate on commercial electricity bills will affect shops, factories, and warehouses, which will eventually trickle down to the people.

“Impacts on the people are inevitable as the additional costs will be passed down and borne by consumers in the long run,” he added.

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