Why the SST expansion misses the real target: the ultra-rich

Starting 1 July, Malaysia’s expanded sales and service tax (SST) framework will kick in.

Under this expansion, luxury and discretionary items like watches yachts, and antique artworks will now be taxed at rates of 5% or 10%, while services such as private wellness treatments, construction, fee-based financial services and private schools will face a 6-8% service tax.

There was also a lot of discussion and backlash about imported fruits getting taxed. While that broadly still applies, the government has announced that imported oranges and apples will be exempted.

The government says these new taxes are essential to fund public projects like new hospitals, especially in light of Malaysia’s low tax-to-gross domestic product (GDP) ratio, currently at 11-12%.

But is this the best path forward? Is it aligned with the prime minister’s rhetoric on taxing the wealthy (or “mahakaya”)?

BFM talks to Gandipan Nantha Gopalan, a central committee member of the socialist party PSM. They discuss what works and what does not about the SST, as well as alternative tax models that could be implemented, which will genuinely target the richest people in society, instead of middle-class or upper-middle-class consumers.

Presented and produced by: Dashran Yohan/BFM

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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