Customs rescinds plan to tax additional 60 items under GST

by MARK RAO

THE Royal Malaysian Customs Department has rescinded an initial plan to impose the Goods and Services Tax (GST) on 60 items including frozen vegetables, figs, margarine and peaches.

A local media reported yesterday that the tax authority had added 60 items to the GST bucket list and the consumption tax of 6% will be imposed from July 1. Among the items which will be levied are eel, swordfish, corn, frozen vegetables, figs, margarine and imported fruits such as avocados, apricots, cherries, peaches and plums.

Customs DG Datuk Indera Subromaniam Tholasy said the tax authority has aborted the decision to tax these items following discussions with the Ministry of Finance (MoF).

“The customs department referred the matter to MoF for feedback and has made the decision to cancel the order,” Subromaniam told The Malaysian Reserve yesterday.

The decision to rescind the tax on the 60 items would be welcomed by about 18.6 million Muslims in the country who will celebrate Hari Raya Aidilfitri this Sunday. Malaysians have been grappling

with rising inflation when the consumer price index rose to an eight-year high at 4.5% in February this year. The increase was largely blamed on high fuel cost, weaker ringgit and a larger year-on-year (YoY) difference.

A weak local unit makes imports expensive and Malaysia spent RM45.4 billion in 2015 for food import. Inflation, however, is expected to become tepid with April’s figure registering 4.4% YoY.

The tax authority can’t sustain a long list of zero-rated items if they want to grow their revenue, said Axcelasia Inc executive chairman Dr Veerinderjeet Singh.

Institute for Democracy and Economic Affairs CEO Wan Saiful Wan Jan said the move to levy GST means the authority wants to raise additional revenue.

The tax authority aims to collect between RM40 billion and RM42 billion in GST this year after posting RM41.2 billion collected last year. This year’s GST collection could even rise to RM45 billion.

The wider and fairer consumption tax was introduced in 2014 and has provided the much needed revenue to operate the nation after traditional income from oil and gas dividends, and tax and commodities plummeted.

But the tax continues to be criticised especially when inflation is rising, weighing on consumers sentiments and spending.