Faizal: Government should consult ex-PMs before expanding SST
He argued their experience could help find better ways to boost national revenue without burdening the people.
Ahmad Faizal criticised the government for taking 'shortcuts' by imposing taxes, cutting fuel subsidies, and raising electricity tariffs without exploring wiser alternatives, saying public disappointment with SST is widespread.
'Surely there are various ways we can increase the country's revenue to provide better services to the people without burdening them again.
'If the government wants to take the SST approach, I would like to suggest that the 10th Prime Minister meet with these three great former prime ministers who have served the country extensively.
'Ask them what is the best way forward. I am confident they are willing to share their ideas and views,' he told reporters after officiating the Tambun Bersatu Division Annual Conference at the Casuarina Convention Centre on Saturday.
The former Perak Menteri Besar said that nearly all traders and customers he spoke to during his market visits expressed disappointment with the SST. —July 6, 2025
Main image: Relocating To Malaysia
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Borneo Post
3 hours ago
- Borneo Post
PAS wants S'wak govt to offer B40 targeted subsidies to counter expanded SST's effects
Jofri said the expanded SST, which came into effect on July 1, has impacted various sectors. MIRI (July 7): Parti Islam Se-Malaysia (PAS) Sarawak has called on the state government to review the expanded sales and service tax (SST), especially on essential consumer goods. PAS Sarawak commissioner Jofri Jaraiee said the expanded SST, which came into effect on July 1, has impacted various sectors, including construction and education, directly contributing to higher prices of items such as cement and school supplies. 'Small traders are also affected by increased transportation costs, which in turn drives up the retail prices of consumer goods. 'This situation not only burdens low-income households but also disrupts their daily lives,' he said in a statement today. According to him, PAS Sarawak has received numerous complaints from people of all walks of life, who are now forced to cut back on spending, reduce essential purchases, or incur debt to cope with the rising cost of living. 'The state government should reintroduce targeted subsidies for the B40 group for basic food items and educational needs. 'Additionally, they also should control the prices of construction materials and transportation services, which are vital for rural development,' he proposed. Jofri also called on the state government to establish a special state-level price monitoring mechanism to prevent price manipulation by suppliers or certain parties. 'We hope the government will listen to the people's concerns and take immediate, fair, and prudent action to safeguard the welfare of its citizens,' he added. expanded SST Jofri Jaraiee pas sarawak
Malay Mail
6 hours ago
- Malay Mail
Towards economic resilience: Malaysia's SST expansion is a tough but necessary step if done right — Goh Lim Thye
JULY 7 — On 1 July 2025, Malaysia implemented a revised and expanded Sales and Service Tax (SST) under the Madani economic framework. While this move had been anticipated by policymakers and industry players, it nevertheless sparked considerable public backlash, particularly among middle-income and urban households already coping with rising living costs. Such frustration is understandable. However, it is also crucial to examine the rationale, intended outcomes, and broader implications of the revised SST through a clear, evidence-based lens. Though not without flaws, the policy represents an important step in Malaysia's broader effort to strengthen fiscal stability and could deliver long-term benefits if implemented thoughtfully and fairly. The SST, reintroduced in 2018 to replace the GST, has been criticised for its narrow tax base and inefficiencies in enforcement. The revised SST seeks to correct some of these weaknesses. The new measures include an increase in the service tax rate from 6 per cent to 8 per cent for selected sectors, excluding essential services such as food and beverage, telecommunications, logistics, and parking. It also expands the scope of taxable services to include private clubs and karaoke centres. Importantly, the government responded to public sentiment by exempting daily essentials such as rice, vegetables, fish, eggs, and certain imported fruits like apples and oranges from sales tax. Additionally, the threshold for SST registration for financial and rental services was raised from RM500,000 to RM1 million, shielding many MSMEs from the expanded tax burden. Malaysia climbed 11 positions to 23rd in the 2025 IMD World Competitiveness Ranking, its highest placement since 2020. Fiscal management is one of the key pillars in this ranking. A stronger tax structure that supports reduced fiscal deficits and sustainable debt management sends a positive signal to investors and rating agencies. — Unsplash pic From a macroeconomic standpoint, Malaysia's tax-to-GDP ratio was just 12.2 per cent in 2022 and has since risen modestly to 13.2 per cent as of Q3 2024. This remains significantly lower than Thailand (16 per cent) and well below the OECD average of over 30 per cent. Such a low tax base constrains the government's ability to fund development expenditure and social protection sustainably. The 2025 Budget estimates an additional fiscal revenue of RM5 billion from newly included items under the revised SST, helping to close the fiscal gap. With Malaysia's national debt standing at RM1.22 trillion — around 63 per cent of GDP as of April 2024 — and the fiscal deficit narrowing from 5.0 per cent in 2023 to 4.1 per cent in 2024, enhancing domestic revenue mobilisation is not a policy choice but a necessity for fiscal resilience. The government has targeted a further reduction in the deficit to 3.8 per cent by 2025. This strategy is not unique to Malaysia. Many economies have broadened their indirect tax systems in the wake of the pandemic. Singapore currently imposes a 9 per cent Goods and Services Tax (GST) as of January 2024, having increased it from 8 per cent the year before. This rate is higher than Malaysia's and reflects a commitment to broad-based consumption taxation while maintaining redistributive policies through schemes like the GST Voucher and permanent U-Save utilities rebates. Indonesia applies a Value Added Tax (VAT) of 11 per cent as of 2022, up from 10 per cent, and is considering increasing it further to 12 per cent by 2025. This reflects an ongoing effort to strengthen revenue mobilisation and support long-term fiscal sustainability. New Zealand runs a 15 per cent GST with minimal exemptions but offsets regressivity through targeted welfare transfers and a progressive income tax system. These international examples underscore that indirect tax systems can be sustainable if designed and implemented within a broader framework of redistribution and transparency. Nonetheless, the regressivity of indirect taxes remains a valid concern. Lower-income households tend to spend a larger portion of their income on consumption and are thus more vulnerable to price hikes. To address this, it is essential that part of the revenue generated from SST expansion be reinvested into targeted assistance. Strengthening direct cash transfer schemes like Bantuan Tunai Rakyat (BTR), expanding food and transport subsidies, and enhancing public healthcare accessibility are crucial to offset the distributional impact of the tax. Moreover, policymakers must ensure there are no leakages in revenue deployment. Effective monitoring by the Auditor General and the Public Accounts Committee (PAC), alongside the use of digital public finance dashboards, would enhance accountability and trust. An often overlooked dimension of tax reform is its contribution to macroeconomic stability and global competitiveness. Malaysia climbed 11 positions to 23rd in the 2025 IMD World Competitiveness Ranking, its highest placement since 2020. Fiscal management is one of the key pillars in this ranking. A stronger tax structure that supports reduced fiscal deficits and sustainable debt management sends a positive signal to investors and rating agencies. If the additional SST revenue contributes to narrowing the deficit from 5 per cent to the targeted 3.8 per cent of GDP over the medium term, it could enhance Malaysia's sovereign credit outlook and investor confidence. Still, effective policy implementation requires clear and consistent communication. The government's decision to reverse the taxation of beauty services and exempt select fruits after public outcry shows policy responsiveness but also highlights the need for better stakeholder engagement. Economic policy, particularly one that affects consumer behaviour and firm-level pricing decisions, must be grounded in transparent consultation. Deliberative dialogue with civil society, chambers of commerce, and think tanks can help preemptively identify blind spots and build public buy-in. Ultimately, the revised SST is a step toward fiscal sustainability and institutional maturity, not an endpoint. It must be accompanied by broader structural reforms improving tax administration efficiency, reducing procurement leakages, and adopting medium-term expenditure frameworks. Equally important is ensuring that taxation is linked to visible and equitable service delivery. Citizens are more likely to accept taxation if they see tangible returns in the form of improved infrastructure, quality education, and accessible healthcare. In conclusion, while the expanded SST is far from perfect, dismissing it outright would ignore the urgent fiscal imperatives confronting Malaysia. The challenge lies in translating tax collection into inclusive development. If additional revenues are allocated with integrity and directed toward closing equity gaps, the SST reform could represent not merely a tax hike, but a pivot toward a more resilient and just economic model. * Dr Goh Lim Thye is a senior lecturer at the Department of Economics, Faculty of Business and Economics, Universiti Malaya, and may be reached at [email protected] ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
The Sun
8 hours ago
- The Sun
Tax Matters – Non-reviewable contracts: Relief or missed opportunity from SST?
IT IS very common for businesses to sign long-term contracts that will go beyond one year. At the time of signing these contracts, the parties to the contracts would not have anticipated the expansion of the Sales and Service Tax (SST) and therefore not built in the necessary clauses to apply the additional taxes. When the announcements came out together with the guides on June 9, 2025, that was the first time taxpayers started understanding the impact of the expansion on their business. At that point, taxpayers were informed that they will be given some leeway via the 'non-reviewable contracts' exemption for a period of 12 months to cushion them from the impact of the expanded SST on ongoing contracts. Is stamping really necessary? On June 29, 2025, a major surprise was thrown at taxpayers which curtailed many businesses from enjoying this temporary exemption for 12 months. The principal impediment which will prevent businesses from enjoying the 12-month non-reviewable contract exemption is a particular condition that states that only contracts that were stamped before June 9, 2025 will be able to enjoy the exemption. This exemption is only available for construction contracts, rental or leasing services contracts and financial services contracts. The requirement to have documents stamped before June 9, 2024 is of a retrospective nature and one of the important principles of tax is 'certainty'. Bringing in rules and legislation that are applied retrospectively is not good practice or law. We believe the purpose of introducing June 9, 2025 as stamping date, although the announcement was made on June 29, 2025, was intended as anti-avoidance measure to prevent the abuse of this provision. The fear could have been on the basis that businesses would attempt to create new documents or modify existing ones to benefit from the exemption. Unfortunately, this can be an 'overkill' because genuine transactions which have been entered into by the parties is effectively thrown out of the window. Genuine transactions that are unlikely to be litigated in court need not be stamped and these transactions will be barred from enjoying the exemption. The Stamp Act does not mandatorily require every written instrument to be stamped. It merely states that if you wish to have it stamped, you must send it for adjudication and seek an assessment. On this understanding, many taxpayers genuinely may not have stamped their agreements. Imposing the stamping requirement condition as a prerequisite to benefit from the exemption appears to be contradictory to the commercial relationship of the parties of the contract. Other problems around non-reviewable contracts It is very likely that we are going to face in the future the same problems we faced when we dealt with similar provision when the Goods and Services Tax was in force. The kind of problems that taxpayers are going to face is the meanings of the phrases 'fixed contract values', 'reviewable or not reviewable' and 'price revision clause or value adjustment mechanism', etc. What happens when existing contracts contain specific tax clauses that allows the parties to pass on any new taxes without changing the original contract price? Similarly, what happens to other clauses that allow certain reimbursable costs without affecting the original contract price for the services or goods provided? How will such changes be interpreted? Will it fall within the non-reviewable contract exemption, or would it be outside? There are many more challenges taxpayers will face when dealing with this exemption. Way forward To avoid any disputes with the Royal Malaysian Customs Department, we would urge taxpayers to immediately bring up all their uncertainties around this issue to the authorities and obtain a ruling. This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (
