Federal govt should emulate Sarawak’s revenue-boosting strategy rather than ‘squeezing’ people with new taxes

Gerald Goh

KUCHING, Jan 26: The Federal government should emulate the positive approach taken by the Sarawak government in actively seeking new avenues for income generation to boost fiscal revenue, rather than implementing new taxes from original ones to “squeeze” taxpayers.

Sarawak United Peoples’ Party (SUPP) Batu Kitang branch organising secretary Gerald Goh characterised the service tax hike from 6 per cent to 8 per cent effective of March this year as “undoubtedly a punishment” for law-abiding taxpayers.

“It will also impose 8 per cent sales and services tax (SST) on traditional and complementary medicine (TCM) service. This is a ‘squeeze approach’, a continuous fragmentation of the original economic pie so that the government can gain some additional revenue.

“However, we all know, this is built on the expanse of the rakyat (people),” he said in a statement today.

Goh emphasised that the Federal government should learn from Sarawak’s success in boosting State revenue through ventures into new economic sectors such as green energy, digital economy and oil projects in recent years, which have resulted in a record revenue of RM13.1 billion for Sarawak last year.

Considering the depreciation of the ringgit and persistent inflation, Goh opined that the Federal government should restructure the tax revenues instead of raising tax rates to enhance the country’s income.

“At present, although Malaysia’s tax rate is relatively low compared to neighbouring countries like Singapore and Thailand, the government’s decision to raise the service tax can be described as prescribing the wrong medicine for the wrong sickness,” he added.

Come March, Malaysians are anticipated to face increased living costs, affecting everything from leisure activities to consulting traditional or complementary medicine practitioners, due to the 8 per cent service tax rate.

Notably exempt from this increase are food and beverage, telecommunications, and vehicle parking services.

Additionally, starting in March, various services, including karaoke outlets, delivery services, brokerage, and underwriting services, will be taxed at 8 per cent.

Other services currently being taxed six per cent such as cigarettes, e-cigarettes, alcohol beverages, certain professional services, digital services, and domestic flight services will likely be hit with the increased rate of 8 per cent.

Logistics services, previously untaxed, will now be subject to a 6 per cent tax.

Overseas-based digital services, such as Netflix, Spotify, and online gaming, will also see a 2 percentage point increase to 8 per cent.

Furthermore, as of Jan 1 this year, Malaysia has also imposed a new 10 per cent sales tax on the import of low-value goods (LVG) priced at RM500 and below sold online.

Moreover, from March, the government will introduce a 10 per cent capital gains tax (CGT) on profits from the disposal of unlisted shares by local companies.

In May, the high-value goods tax (HVGT) is expected to be implemented at rates ranging from 5 per cent to 10 per cent, targeting luxury items like private jets, yachts, jewelry, high-end timepieces, and luxury cars. — DayakDaily