KUALA LUMPUR, Aug 18— Revenue collected from the recent expansion of the Sales and Service Tax (SST) is sufficient to fund projects under the 13th Malaysia Plan (13MP), the Dewan Rakyat heard today.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the government also opted to retain the SST and not reintroduce the Goods and Services Tax (GST) as the former is more targeted and allows for better control.
Addressing the lower house, he said the government does not intend to introduce any new taxes in the near future, focusing instead on improving the SST.
“Any new taxes, like the proposed carbon tax announced in Budget 2025, will only be introduced if there is a strong basis for them. For now, there isn’t,” he said when winding the 13MP debate.
In March last year, the government increased the general service tax from 6 per cent to 8 per cent. In July this year, the scope of the service tax was expanded to cover non-essential services, while the sales tax for luxury goods was increased from 5 per cent to 10 per cent.
The government expects to collect RM5 billion in additional revenue this year from the July 1 expansion, with the amount projected to double to RM10 billion next year.
Earlier in his response, Amir Hamzah said the government decided to stick to SST over GST due to its targeted and progressive manner, and ensures the tax burden is distributed more fairly and borne only by those who are financially capable.
“Among the main considerations (for SST) were system readiness and its immediate impact. The approach is targeted and controlled, unlike the GST, which is more comprehensive.
“The SST allows the government to adopt a more progressive approach by implementing targeted exemptions.
“Although the GST provides a list of exempted and zero-rated items, the total is smaller compared with the list of goods and services not subject to SST. This allows the impact on the public to be managed more effectively.”
Later, when asked by Putrajaya MP Datuk Radzi Md Jidin on the details of the proposed carbon tax, Amir Hamzah said the government plans to introduce it in phases from next year.
He said the tax is part of the government’s commitment to achieving net-zero carbon emissions by 2050.
“In the earlier phase of its implementation, the carbon tax will focus on the iron and steel and energy sectors, which are the main contributors to greenhouse gas emissions.”
He said the Finance Ministry is reviewing international best practices on carbon tax implementation and emissions trading schemes.
