Why the SST Expansion Misses the Real Target: The Ultra-Rich

Starting 1st of July, Malaysia’s expanded Sales and Service Tax (SST) framework will kick in. Under this expansion, luxury and discretionary items like watches, yachts, and antique artworks will now be taxed at rates of 5% or 10%, while services such as private wellness treatments, construction, fee-based financial services, private schools, among others, will face a 6–8% service tax.There was also a lot of discussion and backlash about imported fruits getting taxed. While that broadly still applies, the government did announce today that imported oranges and apples will be exempted.The government says these new taxes are essential to fund public projects like new hospitals, especially in light of Malaysia’s low tax-to-GDP ratio (currently at 11-12%).But is this the best path forward? Is it aligned with the Prime Minister’s rhetoric on taxing the wealthy (or “mahakaya”)?We speak to Gandipan Nantha Gopalan, Central Committee Member, Parti Sosialis Malaysia (PSM). We discuss what works and what doesn’t about the SST, as well as alternative tax models that could be implemented, which will genuinely target the richest people in society, instead of middle class/upper middle class consumers.Image Credit: ShutterstockSee omnystudio.com/listener for privacy information.