KUCHING: Will the 8 per cent sales and service tax (SST) hike on power usage of more than 600kWh critically impact the B40 and M40 middle-income groups?
Malaysian Chinese Association (MCA) president Wee Ka Siong has recently stated that there will be a snowball effect on these lower-income groups despite being directly exempted from the additional 2 per cent spike in the SST rate.
“Although those who use less than 600 kilowatt-hours of electricity a month would be exempted from the rise in the SST rate from 6 per cent to 8 per cent,” Wee in a recent video posted on Facebook said.
He added that the fact that the two percentage point increase applies to commercial entities means that it would still indirectly impact the B40 and M40 groups.
According to Wee, although those who use less than 600 kilowatt-hours of electricity a month would be exempted from the rise in the SST rate from 6 per cent to 8 per cent, he said the fact that the two percentage point increase applies to commercial entities means that it would still indirectly impact B40 and M40 groups.
“The B40 group will be affected by the increase in SST. Why? Factories, warehouses, and shops will increase their rent, affecting the price of goods. Who will bear the increased cost? The people. So this is the effect that it will have on consumers,” he added.
Echoing Wee’s thoughts, Sarawak Premier Datuk Patinggi Abang Johari Tun Openg said yesterday: “Electricity tariffs in Sarawak are expected to increase in line with the implementation of the revised SST from 6 per cent to 8 per cent.
“The state has no option but to comply with the expected changes as the imposition of the tax is in force nationwide.”
However, the premier has given assurance that the state government will continue to help domestic consumers through its initiative.
“We have exemption (initiative), so we can make our own decisions within the state,” he told reporters in Kuching yesterday.
However, a Sarawak politician, Michael Kong, begs to differ.
According to him, the SST would only be applicable for electricity usage above 600kWh, which should not affect almost 85 per cent of users nationwide, as announced by the Ministry of Finance last year.
“While I note Wee Ka Siong’s concerns about a snowball effect of increased cost, he has first used the wrong example.
“Commercial electricity is currently exempt from taxation, and the hike to 8 per cent SST does not affect its exemption status. Thus there will be no snowball effect due to electricity tariff,” he told The Exchange Asia.
According to him, it is important to recognise the need for Malaysia to broaden the tax base for a stronger fiscal foundation now.
He said the government is equally responsible for this increase in SST and must find ways to alleviate the financial burden of the people.
“Therefore while some businesses will have to increase the price for their services, the Ministry of Finance has given its commitment to utilise the additional estimated RM3 billion in revenue to enhance social assistance for the people.
“This will not only help to mitigate the costs of living faced by the people but more importantly to redistribute financial assistance to those who need them such as the B40 and M40,” added the DAP politician, a special officer to Sarawak party chief Chong Chieng Jen.
