The Sales and Service Tax (SST) reintroduction will be at a rate of 10% for the sales and 6% for the services. The announcement was made by Lim Guan Eng, Finance Minister on 16th July 2018. The Finance Minister stated that the SST bill will be passed in Parliament at around August.
GST has not been well accepted over the years as most people say that the prices of goods and services has gone up and there hasn’t been seen any benefits from the additional tax revenue which has been collected. GST claim back for businesses has been quite difficult, one is required to pay a minimum of RM500,000 in annual sales, and the worst thing is that it can also be declined.
SST will cause the government’s tax revenue to drop, which is an estimation of about RM25 billion. Most countries have moved on to GST since SST is seen as a form of tax that doesn’t provide much progress.
Here we are going to look at the advantages and disadvantages that SST brings to the table as compared to GST.
There are a few differences between SST and GST which you need to know about. We are going to outline these differences to help you learn more about these two types of taxation systems.
SST helps to provide convenience to consumers since only 38% of goods and services in the consumer price index (CPI) basket is taxed which is a huge difference compared to the GST which was 60%. The tax cut also helps to support consumer spending. Which is also has a positive effect to the countries cash-flow when people are spending.
The SST taxation system is also deemed to be fairer compared to the GST system, although statistics state that it doesn’t provide much progress.
SST is also very people-friendly since goods and services will be provided at a lower price compare to when the GST system was in effect. This system is without a doubt better for the common man whose main concern is how much they will be paying for day to day commodities. Therefore, most people will favor the SST system which seemingly makes their cost of living bearable.
SST is well suitable for the Malaysian environment since it’s fair to both the people and business communities. Businesses are happy when people are able to afford their goods and services, which is the case with the SST system.
The Malaysian government has been wise to revert to the SST system, especially due to the power they give to their citizens. This is because this system is gentle on the taxation of consumer commodities, thereby allowing people more disposable incomes. This has a trickle down effect of a happier citizenry which can comfortably afford a quality lifestyle.
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