Commenting on the recently tabled Budget 2024, Malaysian United Democratic Alliance (MUDA) president Syed Saddiq, has lambasted the unity government for its broken promises and for discreetly raising the Sales and Services Tax (SST) from 6% to 8%.
He claimed that the increase in SST was actually the Goods and Services Tax (GST) "in disguise" and criticised the government for refusing to implement GST when they were in the opposition - but now they choose to increase the SST instead!
Furthermore, he claimed that the 2% increase is quite a significant sum considering a lot of essential items will be affected including clothing, trousers, shoes, toiletries, sanitary pads and school equipment; it is also bound to badly affect the middle-income group (M40).
The Muar MP pointed out that even though the food and beverage sector is exempted from the increase, restaurant operators who purchase equipment for their businesses will naturally transfer the additional costs to consumers, which will then bump up the cost-of-living expenses.
Meanwhile, on the topic of wastage, he took aim at the government for announcing in the budget that government officials will soon be using luxury electric vehicles (EV), when earlier they had criticised previous governments for using the high-end Toyota Vellfire instead of local Proton models.
Additionally, he raised the sensitive issue of the repayment discount on the National Higher Education Fund (PTPTN) loans which has been halved from the previous 20%! The government had also earlier promised that graduates only needed to make repayments once their salary hit a certain bracket. "What happened to those promises?" he asked.
As an opposition MP, Syed Saddiq certainly has every right to question the government. However, local business portal The Edge Malaysia had reported that the higher SST rate was due to the government's reluctance to reimpose GST fearing its adverse impact on lower income households.
According to the recent budget announcement by PM Anwar, in addition to the higher rate, the scope of the SST will also be expanded to include logistics services, brokerage, underwriting and entertainment (karaoke) - plus labour charges on vehicle servicing!
However, the PM did highlight that in order not to burden the people, services such as the food and beverages (F&B) sector plus telecommunications will be excluded as they are considered essential items and services.
Also, given that the imposition of GST at this point of time, is bound to face strong objection from the public, perhaps the 2% increase in SST seems like some kind of a “compromise” to raise the country's tax revenue collection - something which the country badly needs given the challenging economic conditions.
Moreover, unlike GST which involves a broader tax base, SST involves a narrower tax base, and though the tax revenue collection from it may be smaller, its impact on the B40 and M40 segments will be less pronounced compared to GST.
As for Syed Saddiq's argument over the use of EV - with practically the whole world preparing to transition to renewable energy source away from fossil fuel - perhaps, this may be one way of preparing the public to change their perception of electric vehicles. Moreover, it's almost inevitable that fuel-powered cars will be phased out gradually in the near future!
In fact, overall the budget appears to have attracted positive feedback from many quarters, including economists, with its clearly defined measures for improving people's living standards and the restructuring of the economy for a more robust and sustained growth.
Still, many in the middle-income group may have reasons to feel somewhat sidelined though one has to take note that at RM393.8bil it is the highest ever budget rolled out in the history of the country - so much so PM Anwar may already be having sleepless nights wondering whether there'll be enough revenue next year to spend as planned!
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