The Madani government, led by Prime Minister Anwar Ibrahim, assured that essential items like food, beverages, and telecommunications services would not be affected.Universiti Utara Malaysia school of economics, finance and banking senior lecturer Nur Hafizah Ismail said, the rise in prices of some goods can be attributed to the higher service tax on logistics services, the lifeline of supply chains.
The service tax, and the sales tax, were reintroduced by the government in 2018 after the 6% Goods and Services Tax , which had been in effect since April 2015, was abolished.The prime minister announced the increase in the service tax from 6% to 8% during the presentation of Budget 2024 last October, with the finance ministry projecting an additional revenue of RM3 billion to the country as a result of this 2% increase.
She added development expenditure is crucial for the implementation of the country’s socio-economic agenda including improving the quality of services such as healthcare, transportation and communication, telecommunications, and education as well as social welfare programmes that directly benefit the people.
“It cannot be denied the increase in the tax rate will impact consumers including reducing their purchasing power due to inflation. So, this is where consumers must spend their money wisely,” she said. “This is because the level of compliance and enforcement mechanisms are crucial factors that will help achieve the government’s goal of increasing tax revenue by RM3 billion through the new service tax rate,” she added.