PRIME Minister Datuk Seri Anwar Ibrahim said the government will collect an estimated RM3 billion in revenues from the Sales and Service Tax (SST) after the increase from 6% to 8% starting this month.

However, he said the impact to consumer is “minimal” with SST focuses more on discretionary service-related and inter-business activities.

“Through the scope and change of this service tax, the government expects it will collect revenue amounting to RM3 billion.

“The changes also do not reflect a significant impact on the inflation rate, which is recorded at around 0.2 percentage points based on data provided by the Statistics Department,” he told the Dewan Rakyat during Prime Minister Question Time this morning.

Anwar, who is also the Finance Minister was responding to Datuk Mohd Shahar Abdullah (BN-Paya Besar) who enquired about the impact on the cost of living for the people and the production costs of industries due to the increase in the SST.

Mohd Shahar also enquired about the additional revenue collection amount from the implementation of all new tax measures for this year.

Meanwhile, Anwar said the scope of the SST is still relatively small and only affects 41% of the services sector.

“The number of service providers is also limited to the 60,000 entities registered with the Customs Department,” he said.

On other tax measures to increase government revenue, Anwar said the Capital Gains Tax is expected to raise RM800 million annually.

The government will also be able to save over RM4 billion in revenue through the restructuring of subsidies despite maintaining electricity tariffs for 85 % of consumers.

“The same approach (of targeted subsidies) was applied in the reform of taxes, which adopts a progressive approach, focusing more on increasing tax revenue from those who can afford it and ensure that the majority of the people are not burdened,” he said.

Anwar said the government also expected increased revenue from dividends from Bank Negara Malaysia, Petronas, and Khazanah Nasional’s investments.

He said the investments by these entities yielded high returns.

“In 2023, investment income represented 65 per cent of non-tax revenue. Hence, I agree that additional efforts including the transformation of government-linked investment companies (GLICs) are needed to ensure an increase in domestic investments.

“With more active domestic investments, we hope non-tax revenue can also be increased.”

Previously, the government also introduced a 10 percent Low-Value Goods Tax (LVG) for online sales (e-commerce), an eight percent Digital Services Tax (DST), as well as a 10 percent Capital Gains Tax (CGT).

The government will also introduce a High-Value Goods Tax (HVGT) from May 1 as high as 10% as announced by Anwar during the presentation of the Budget 2024.

These measures are part of the government’s efforts to improve the country’s financial resilience while reducing its budget deficit. — TMR / pic credit: MEDIA MULIA