by AZALEA AZUAR / pic TMR FILE

RETAIL Group Malaysia Managing Director Tan Hai Hsin (picture) has raised concern that the increase of sales and services tax (SST) increase from 6% to 8% will affect retail spending.

He said it would affect the food supply chain, which in turn would likely make the price of goods especially in the food outlets increase although they are not affected with SST.

“Although foods, beverages and telecommunication sectors are not affected, the retail prices of food and beverages (F&B) outlets will increase.

“This is because this increment will affect the entire food supply chain, including importers, distributors, logistic companies, retail property owners, etc,” he said in response to the 2024 Budget announcement yesterday.

Tan added that the increment’s level of impact cannot be determined due to the lack of a time frame and whether it will be a gradual or one-time increase.

He also commented on the government imposing a 5% to 10% tax on luxury goods saying he felt that this is similar to the proposed luxury tax that was supposed to be implemented by the second half of this year.

“Generally, we do not expect it to affect retail spending. Consumers who are prepared to pay for luxury brands will still be willing to do so with small increments,” he said.

He added that the text lacks specific definitions of high-value goods, such as iPhones, imported sofas, and limited edition sneakers, which could potentially be considered luxury items.

However Tan welcomes the government’s decision to increase the subsidies for households and individuals in order to combat rising inflation.

These include 50% of RM58.1 billion will be allocated for price control, with a 30% discount on basic necessities as well as the increment for Rahmah Cash Contribution which would help spending.