KUALA LUMPUR – Syed Saddiq Syed Abdul Rahman (Muar-Muda) has accused the government of being dishonest and lacking transparency in relation to the increased service tax.
Addressing the Dewan Rakyat today, the former Muda president claimed that the government had opted to include maintenance and repair services as being subject to the tax increase without proper stakeholder consultations.
“Last week, just three days before the (increased) tax was enforced, the government, through backdoor means, included a new sector in the tax scope (covering) maintenance and repair services,” Syed Saddiq said when debating the royal address in Parliament.
“(The sector) was included last-minute without being tabled in Parliament and no consultation sessions were held beforehand.
“The move has received backlash from experts (since) it was a hasty decision executed without transparency.
“The inclusion of the sector is very broad and general. The people are asking if (the tax) will affect laptop, handphone and car repairs. It’s obvious that this will affect the people’s cost of living,” he added.
Chiming in on the matter, opposition lawmaker Datuk Radzi Jidin (Putrajaya-PN) similarly accused the government of failing to properly disseminate accurate information on the service tax, which was raised from 6% to 8% effective March 1.
“In a poster shared by the communications minister, it was stated that the logistics sector is not affected by the increased tax, but in reality, the sector is a newly included scope which will be imposed a 6% SST rate.
“Yes, the rate (for logistics) is not increased (to 8%), but the scope has just been included for the tax.
“The rakyat is worried if this will cause ‘tax-on-tax’ to occur. How is the Finance Ministry planning on handling this?” the Bersatu vice-president questioned.
In response, Syed Saddiq said that he too was “surprised” at the poster in question, saying: “In an official circular shared on the Finance Ministry’s website, the logistics sector is included, with service tax for it going from 0% to 6%, which is quite a significant increase.
“Putrajaya (Radzi) is right, ‘tax-on-tax’ will occur and the cascading effect will cause the price of basic necessities to increase drastically.”
The government has said the increased service tax rate of 8% will not affect consumer basics such as food and beverages and electricity usage below RM220.
The Finance Ministry had previously said that the government does not anticipate the higher tax to lead to sharp price increases that would cause an economic shock, as the increase affects selected taxable services.
However, Syed Saddiq alleged that it was “deceitful” of the government to claim that the tax would not affect lower-income households, saying: “Those who defend the (service tax) increase might not realise that the tax covers a lot of daily activities and services.
“Are the rich the only ones who use sports facilities such as futsal and badminton courts as well as football fields? What about (those who subscribe to) online streaming services such as Netflix and Disney+ as well as online shoppers?
“Motorcycle and car licences, purchases of new cars and health insurance (will also be affected by the tax increase). Since when have (these services) only involved the rich?” he questioned.
For the record, management services, including maintenance and repair work, warehousing, collection and debt, sports facilities, and secretarial works are subject to the higher tax.
For vehicle repair and maintenance, services such as wheel alignment and balancing would be affected by the two-percentage-point increment.
Firms offering insurance and takaful services, customs agents, motor vehicle services, courier, rental and tour vehicles, advertising, and cleaning now come with an 8% service tax.
The 8% service tax, announced in the tabling of Budget 2024, was gazetted on February 23 under the Service Tax (Amendment) Regulations 2024. – March 4, 2024