Guan Eng wants review on service tax hike, other new taxes

PARLIAMENT | The government should review the new rate for the service tax which is burdensome to traders and the people, said former finance minister Lim Guan Eng (Harapan-Bagan).

He added that the new rate and any other new taxes could be reintroduced when the economic situation recovers.

“I request that all new taxes including the service tax and the luxury tax be reviewed. If it burdens traders and the people, it can be delayed due to the uncertain economic growth situation.

“We also know that the economic situation will recover at the end of this year and this includes the value of the national currency which is expected to recover in the second half of this year.

“So, it is hoped that there will be a reconsideration and review so that the new tax, the service tax rate which has now been increased to eight percent, will be reconsidered,” he said during the debate on the royal decree of the Yang di-Pertuan Agong.

The service tax was increased to eight percent from the previous six percent effective March 1. However, this new rate does not include services for food and beverages, telecommunications, and parking.

Previously, the government also introduced a 10 percent Low-Value Goods Tax (LVG) for online sales (e-commerce), an eight percent Digital Services Tax (DST), as well as a Capital Gains Tax (CGT) at 10 percent.

The government will also introduce a High-Value Goods Tax (HVGT) from May 1 as high as 10 percent. This was announced by Anwar Ibrahim in his capacity as finance minister during the presentation of the 2024 Budget.

These measures are part of the government’s efforts to improve the country’s financial resilience while reducing its budget deficit.

Call for GST

MCA president Wee Ka Siong said that feedback he received from the public indicated a call for the return of the Goods and Services Tax (GST), which was introduced in 2014 but repealed in 2018.

In a post on social media, he said he often receives feedback from visitors to Parliament asking him to speak out on this issue.

Wee said people have asked him to “Please continue to push for the return of GST”.

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KINIGUIDE | The service tax changes starting today