KUALA LUMPUR (Feb 12): The additional revenue from sales and service tax (SST) expansion to 8.0 per cent from 6.0 per cent effective March 1, 2024 can benefit the rakyat in the form of cash aid, urban infrastructure and healthcare amid the ageing population in the country.
The new rate excludes services such as food and beverages, telecommunication, parking and logistics.
To Bank Muamalat Malaysia Bhd’s chief economist Dr Mohd Afzanizam Abdul Rashid, the move is a step in the right direction as this will bring in more revenue and effectively reduce Malaysia’s budget gap.
“It will complement the government’s other measures such as subsidies rationalisation and pension reforms, which ultimately reduce the fiscal deficits.
The measure is also seen as the government’s efforts to take charge of its finances so that it will be more resilient and to ensure that the deficits and debt level will be in a lower trajectory as prescribed in the Public Finance and Fiscal Responsibility Act.
This, in turn, will improve the government’s credibility and could boost investors’ confidence, he added.
It will also expand the scope of taxable services to include brokerage, underwriting and karaoke, Prime Minister Datuk Seri Anwar Ibrahim said when presenting Budget 2024 in the Dewan Rakyat.
Giving back to Healthcare Sector as Malaysia heads toward ageing nation
A higher revenue would mean the government will have the financial means to prescribe more spending.
Therefore, PwC Malaysia indirect tax leader Raja Kumaran suggested giving back to the healthcare sector to prepare for an ageing population.
He said more investment should be set aside for making urban infrastructure more friendly, accessible and services ‘age-ready’ to accommodate the segments.
Raja said that developing a comprehensive education approach to support health literacy among the ageing population is also crucial as it has been reported that Malaysia’s ageing population is growing at a faster rate compared to 30 years ago.
The Department of Statistics Malaysia (DoSM) had predicted that Malaysia will attain ageing nation status earlier than predicted amid a decline in the ratio of the nation’s crude birth rate and crude death rate.
This has impacted the structure of Malaysia’s population, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said.
He said that based on the nation’s crude birth rate and crude death rate, there was an average of 14.4 live births and 5.1 deaths per 1,000 population in 2020, with a ratio of 2.8 births for every death.
Ten years ago, he said there was an average of 17.2 live births and 4.6 deaths per 1,000 population, with a ratio of 3.7 births for each death.
Earlier, DOSM had said that Malaysia is expected to be an ageing nation by 2030 when 15.3 per cent of the population is aged 60 years and above.
Widening cash aid for B40 and M40
Meanwhile, Mohd Afzanizam recommended the additional tax revenue be spent on cash transfer programmes such as Sumbangan Tunai Rahmah (STR), which aims to help Malaysians cope with the rising cost of living and Sumbangan Asas Rahmah (SARA) cash aid for the poor and hardcore poor households.
“What can be done is an increase in allocations.
“However, this is obviously highly dependent on the government’s financial position where the need to raise taxes and rationalise subsidies is necessary,” he explained.
A total of 9 million eligible individuals or 60 per cent of the country’s adult population will benefit from STR 2024, with the government increasing STR 2024 allocation to RM10 billion from RM8 billion the previous year.
The maximum rate for STR was raised to RM3,700 this year from the previous year’s RM3,100, while the minimum rate STR for youths will also be increased from RM350 to RM500.
In January, the Prime Minister said that this year the SARA programme will benefit over 700,000 recipients with RM700 million in allocations, a five-fold increase, compared to 210,000 recipients with an expenditure of RM130 million last year.
Improvements to the programme include expanding qualified recipients to the poor compared to the hardcore poor only last year.
Anwar said that the rise in allocation amount was intended to improve SARA as a targeted subsidy aid to those who are most affected by rising costs of living. – Bernama