Kota Kinabalu: The Federal Government’s decision to expand the Sales and Service Tax (SST) coverage effective July 1 2025 is especially unfair and harsh on the people of Sabah, said Bersatu Sabah Women Chief Rahimah Majid.
She said it is well-known that the cost of living and the cost of doing business in Sabah are significantly higher — averaging 20 per cent to 30 per cent more — than in Peninsular Malaysia.
“From food and fuel to logistics and daily necessities, Sabahans are already paying more across the board. To make matters worse, the average salary in Sabah remains disproportionately low, and the employment rate continues to lag behind the national average. Imposing additional taxes under these circumstances is not only unjust — it is cruel.
window.googletag = window.googletag || {cmd: []};googletag.cmd.push(function() {googletag.defineSlot('/22826383987/dailyexpress_inline', [1, 1], 'gpt-passback').addService(googletag.pubads());googletag.enableServices();googletag.display('gpt-passback');});“I strongly denounce the Federal Government’s decision to expand the SST coverage. This is a deeply regressive move with harsh and far-reaching consequences for the rakyat, businesses, and the national economy,” she said in a statement on Wednesday.
Rahimah expressed particular concern over the inclusion of key services under the expanded SST regime — namely leasing and rental, construction, financial services, as well as private healthcare and education.
“These are not luxury services; they are essential to daily life, economic development, and social mobility. Taxing these sectors at rates between six and eight per cent will inevitably result in higher costs being passed on to consumers, particularly low-income households who are already struggling,” she said.
Commenting on the Government’s claim that thresholds and exemptions have been introduced to protect the vulnerable, Rahimah stressed that such safeguards are, in practice, inadequate and will be easily overwhelmed by the ripple effects of increased costs.
“For example, taxing the construction sector will drive up property prices and rental rates, making decent housing even more unaffordable especially for Sabahans, who already contend with underdeveloped public infrastructure and limited access to basic services,” she said.
Rahimah expressed regret that the tax expansion comes at a time when many families are already grappling with the rising cost of living, stagnant wages, and ongoing economic uncertainty.
“By widening the tax net to include essential services and everyday items, the government is effectively squeezing the people further, making daily survival increasingly difficult for many,” she warned.
Rahimah also said businesses, especially small and medium enterprises (SMEs), would also bear the brunt of this policy, facing heavier compliance costs and declining consumer demand.
Such a move threatens to stall economic recovery and further widen inequality — at a time when the nation urgently needs support, stability, and confidence.
“This is not the way to build a resilient and inclusive economy. Instead of taxing essential services, the government must pursue more equitable and sustainable revenue strategies that do not punish the people.
“The people should not be made to pay for the government’s fiscal mismanagement. I call on the federal government to immediately halt this policy, conduct meaningful consultations with stakeholders, and put the welfare of the people, especially the B40 and underprivileged, first, ahead of bureaucratic convenience,” she said.
