Latest news with #JohanMahmoodMerican
Free Malaysia Today
11 hours ago
- Business
- Free Malaysia Today
Plug leakages to ensure SST income not squandered, govt told
The government expects to generate an additional RM5 billion from the upcoming SST this year, and RM10 billion from 2026 onwards. (Bernama pic) PETALING JAYA : The government needs to plug inefficiencies in its departments and agencies to ensure the additional RM10 billion in yearly revenue expected from an expansion of the sales and service tax (SST) regime is spent wisely, an economist said. Ahmed Razman Abdul Latiff of Putra Business School said the government is currently prioritising procurement reform by introducing an open tender system to replace direct negotiations. Ahmed Razman Abdul Latiff. He said the open tender system offers a more structured approach which is essential to prevent wastage in public spending. 'Reforms to the procurement system are vital if we want to discourage graft and ensure that the additional RM10 billion in revenue earned from the expanded SST is not dissipated. 'Statistics show that a majority of cases involving wastage, leakages and corruption stem from a weak procurement system,' he told FMT. In a recent interview with FMT, Treasury secretary-general Johan Mahmood Merican said the government was in the midst of reforming the procurement system to ensure revenue is spent optimally and to curb leakages. Johan said the government was expected to generate an additional RM5 billion this year from the SST expansion which kicks in next month. The SST is expected to generate RM10 billion annually beginning next year. Earlier this month, the finance ministry announced that a 5% to 10% rate will be imposed on non-essential goods from July 1, including rent, lease, construction, financial services, private healthcare and education. However, basic necessities will retain its tax exempt status. With the expansion, the government expects the SST to generate RM51.7 billion in revenue this year. Afzanizam Rashid. Separately, Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the procurement reforms, being implemented alongside the SST, would help narrow the country's fiscal deficit. He said the dual initiatives would broaden fiscal space, enabling the government to enhance social assistance and allocate more funds for infrastructure development. Afzanizam said the increase in service tax to 8% in March last year bumped up SST collection by 30.3% in the first quarter of this year. Meanwhile, the implementation of targeted diesel subsidies has reduced spending on subsidies and social aid by 19.4%. 'The increased tax collection and reduced spending saw the fiscal deficit drop to 4.5% of the gross domestic product for the first quarter of 2024. 'This has allowed the government to increase aid for its Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) programmes to RM13 billion this year, up from RM10 billion in 2024.'
The Sun
a day ago
- Business
- The Sun
Apples and oranges exempt from expanded SST in Malaysia
KUALA LUMPUR: Apples and oranges will continue to be exempt from the expanded Sales and Service Tax (SST) as they are widely consumed and cannot be grown locally, according to Treasury secretary-general Datuk Johan Mahmood Merican. He explained that these fruits are dietary staples, especially during festive seasons like Chinese New Year and Hari Raya, making their tax exemption necessary to ease public expenses. 'These fruits cannot be produced locally due to our climate, but they are part of daily consumption for many Malaysians,' Johan said during a Finance Ministry TikTok Live session titled 'SST Naik, Semua Harga Pun Naik?' While imported fruits such as strawberries, blueberries, and avocados will be taxed under the expanded SST, Johan stressed that apples and oranges remain tax-free to avoid burdening consumers. 'We want to encourage the consumption of local fruits, but at the same time, we recognise that apples and oranges are important in people's daily lives,' he added. Local fruits, including 'pisang mas', remain untaxed, ensuring stable prices for consumers. Johan noted that 90 per cent of bananas in Malaysia are locally sourced, with only 10 per cent imported. 'Supporting local produce helps the economy and ensures affordability,' he said, adding that snacks like 'pisang goreng' will not see price hikes unless made with imported bananas. Separately, Johan confirmed that gold bars and jewellery will retain a zero tax rate due to their cultural and economic significance. 'Gold is often used within communities for savings, as collateral for loans, and as blessings during weddings and childbirth. Therefore, we have decided to maintain a zero tax rate due to its importance in the community and its role in the economy,' he said. The government expects an additional RM10 billion in revenue from SST collections, opting to retain it over reintroducing the Goods and Services Tax (GST) for its lighter consumer impact.
The Star
2 days ago
- Business
- The Star
Gold not subject to SST due to investment, cultural, economic reasons, says Treasury sec-gen
PETALING JAYA: Gold purchases will not be subject to the Sales and Service Tax (SST), says Datuk Johan Mahmood Merican. The Treasury secretary-general said the government has decided not to tax gold purchases owing to investment, cultural and economic reasons, and to avoid increasing the burden on the public and businesses. "Gold bars and jewellery are often considered investment tools or savings. "From a cultural perspective, gold plays an important role in various communities, often given as symbolic gifts or blessings during significant life events such as the birth of a child or weddings," he said on Thursday (June 26) night. He noted that some businesses also use gold as collateral to obtain operational funds, such as for cash flow or loans. Johan was speaking at a Finance Ministry TikTok live session, titled "SST Naik, Semua Harga Pun Naik?" (SST Gone Up, All Prices Going Up Too?), addressing public inquiries about the expanded SST scope. "Although some perceive gold as a high-value consumer good, the government has decided to maintain a zero tax rate. "So even if you walk into a jewellery shop to buy a gold necklace or similar items, no tax will be imposed," he said. On a related matter, Johan said the government will also not tax apples and oranges, which have become daily consumed fruits among Malaysians. "Although apples and oranges are not suitable for cultivation in Malaysia, they are integral to daily life. "For instance, during Chinese New Year or Hari Raya, the demand for these fruits is particularly high, justifying the tax exemption," he said. Johari noted that local fruits like the "pisang mas" would not be taxed, while other imported fruits like strawberries, blueberries and avocados that are considered "selective items" would continue to be taxed. "So, the cost of our 'pisang goreng' will not increase. But if imported bananas are used, they will be taxed," he said. He noted that since the government announced the expanded SST tax scope, they have received feedback from the public, with many supporting the move as it aids in promoting the cultivation and development of local fruits. "Take bananas, for example, we are confident that local production is sufficient to meet market demand. "According to statistics, 90% of bananas consumed by Malaysians are locally sourced, with only 10% being imported. "We should continue to support local bananas since 'pisang mas' not only tastes better but is also cheaper and more readily available," he added. Johan also said the government has opted to retain the SST instead of reintroducing the Goods and Services Tax (GST) to lessen the tax burden on citizens. Despite being a more efficient system covering nearly all goods and services, GST ultimately places a heavier burden on consumers, he said. "GST is effective for revenue collection as it captures the entire economy. "However, the final tax burden falls entirely on the people, as businesses can reclaim their GST inputs, but the end consumers cannot." Although SST might be less comprehensive, he said it imposes less financial pressure on the public. "SST has been in place since the 1970s, making it familiar and easier to implement. "It targets businesses rather than essential goods, reducing the financial impact on consumers," he said, adding that the government aims to raise an additional RM10bil through SST collections.
New Straits Times
2 days ago
- Business
- New Straits Times
SST preferred over GST to reduce people's burden: Johan Merican
KUALA LUMPUR: The government has chosen to maintain the Sales and Service Tax (SST), instead of reintroducing the Goods and Services Tax (GST), in order to reduce the tax burden on the people. Treasury secretary-general Datuk Johan Mahmood Merican said while GST is a more efficient and comprehensive tax system, it ultimately places a heavier burden on end consumers. "GST has its strengths. It is broad-based, covers nearly all goods and services, and applies at every stage of the supply chain. From a revenue collection perspective, it is very effective because it captures the entire economy. "However, under GST, the final tax burden falls entirely on the rakyat. Businesses can claim back the GST they pay, but the end consumer cannot," he said. Johan was speaking during a TikTok Live hosted by the Finance Ministry titled 'SST Naik, Semua Harga Pun Naik?', aimed at addressing public concerns over the upcoming expanded SST and its implications. Johan explained that while SST is less efficient from a taxation standpoint and does not cover as wide a range of economic activities as GST, it imposes less financial pressure on the public. "SST has been part of our tax system since the 1970s, so it is familiar and easier to implement. It is also more targeted, as we avoid taxing essential goods and focus more on taxing businesses," he said. Johan noted that the government aims to collect an additional RM10 billion in revenue under the SST system. By comparison, reinstating GST with its previous framework could bring in more than RM20 billion. "From a business point of view, GST may be preferred because companies can claim back the tax paid. But some businesses may find SST burdensome, as they have to absorb the tax without the ability to recover it," he said. He added that the government's decision reflects a balancing act between raising national revenue and safeguarding the rakyat from higher living costs. "Even though SST may be less efficient in terms of tax collection, it allows us to minimise the impact on consumers. "That's why we've chosen to expand SST rather than reintroduce GST for now," Johan said.
The Star
3 days ago
- Business
- The Star
‘SST expansion targets luxuries, not necessities'
PETALING JAYA: The expansion of the Sales and Service Tax (SST) is part of the government's strategy to focus taxation on discretionary spending and not basic needs to protect vulnerable households, says the Treasury secretary-general. According to Datuk Johan Mahmood Merican (pic) , the structure of the expansion minimised the people's burden by exempting basic goods and small service operators from SST. Following concerns about affordability for low-income groups, Johan said the SST's projected impact on inflation is modest and should not negate the benefits of wage reforms. 'Bank estimates show SST would only add about 0.25% to the consumer price index. So yes, there is impact, but not of a magnitude that wipes out wage gains,' he said. 'The very basic goods – your chicken meat, vegetables, rice, roti – remain at 0%,' he told media practitioners attending the Concorde Club meeting via Zoom yesterday. 'Even for seafood, it's targeted. Kembung and tilapia remain exempt while premium items like salmon and caviar are taxed.' While imported fruits will be subject to 5% SST and local fruits remain exempt, Johan said that it was a matter of consumer choice and the policy support for domestic agriculture. 'We feel there is an element of choice. There are local fruits you can buy. It's also about promoting local food production,' he said. Regarding the expansion of the SST to include hair and beauty salons, which have been classified as non-essential services, Johan stated that the government has set clear boundaries to safeguard small businesses from the burdens of compliance. 'The smaller one-man or two-man barbershops are likely to have below the RM500,000 annual threshold and won't be taxed. 'Larger establishments offering premium services would fall within the scope,' he said. On the minimum wage raised from RM1,500 to RM1,700, Johan said the initiative would translate into a net benefit, especially when paired with the exemption of basic goods from SST. He also pointed out that most households will see reduced electricity bills under the latest tariff adjustments and will continue enjoying fuel subsidies under the planned RON95 rationalisation. 'This combination of targeted taxation, maintained subsidies and higher wages is meant to ease pressure on the rakyat while ensuring we have the revenue to fund public services,' Johan added. The Concorde Club is an informal gathering of editors and senior journalists with politicians, policymakers and key opinion leaders. Previous guests of the Concorde Club, led by Bernama chairman Datuk Seri Wong Chun Wai, included senior ministers and government leaders. On June 9, the government announced a targeted review of the SST rate, which will take effect from July 1. The sales tax rate will remain the same for essential goods, while a rate of 5% or 10% will be imposed on non-essential or discretionary goods. The scope of service tax has also been expanded to cover six new services such as rental or leasing, construction, finance, private healthcare, education and beauty.
