Harapan, the new SST will kill off SMEs

As owners of a SME-sized *(small and medium enterprise) restaurant serving local dishes, we are really upset by the way the SST and the Service Tax by the new government is being reintroduced. For us, it just seems like a different way to ‘brand’ the GST.

Why do we say this?

One of the biggest issues is the threshold at which the tax will apply, it's simply unrealistic and low.

At a RM500,000 turnover threshold, the move doesn’t affect only big companies, it affects basically most of the small restaurants and hawker stalls. For RM500,000 of turnover a year, it basically means RM1,600 of daily sales. In Kuala Lumpur and Selangor, the average of rental rate for a shop space is between RM4,000 to RM6,000 monthly.

For a normal restaurant that needs to hire a local cook (according to the new ruling, which is way too sudden and another headache Harapan has given us) and a minimum of 6 staff, a business having sales of less than RM1,600 a day couldn’t really survive.

We are disappointed with the proposed RM500,000 threshold. The Service Tax threshold should be increased to RM3 millions instead to be meaningful. This is because the RM500,000 threshold will seriously affect all the small restaurants that serve authentic local food.

Malaysia is well know for its local food, and if the service tax is imposed to most of the restaurants and hawker stalls in Malaysia, this will kill off the culture of serving authentic local food as small companies can no longer compete or make a reasonable profit. And people will be only left with big chain stalls in the food market.

To make matters worse, the SST will also affect manufacturers with a RM500,000 turn over, and basically it means that even a normal homemade burger petty supplier, or meatball suppliers will have to pay 10% SST. And if a busy hawker stall selling meatball noodles see their cost increased by 10%, then the have to charge another 6% service tax to the customers.

This means customers have to pay even more, compared to the GST era. This is because suppliers and retailer can’t deduct the SST as input tax, and the only way to sustain the business is to increase the price tag.

This will slow down the economy for another one or two more years, maybe. Because when the price tag increases, people will again lose their purchasing power. This is the issue that Dr Mahathir Mohamad mentioned before.

We hope the new government could revise the proposed RM500,000 threshold back to RM3 million so that SMEs are not suffocated. As we know, the F&B in Malaysia plays a big role in the economy -  if the new policy starts to kill off smaller restaurants, we will lose the speciality of Malaysian food, and as the new Finance Minister Lim Guan Eng had said before as Penang chief minister, one of the reasons visitors travel to Malaysia is because they enjoy our food.

We have suffered for three years with GST, and now the new government is effectively reimposing the same tax on us. This will definitely slow down the market even more.

Please, whoever stole our money, take it back from him, but please don’t dig more from tax payers. SMEs have always been paying tax to support the country, now that country has lost our money, stop digging more from us tax payers.

Maybe big corporations can still survive as they are serving the high class customer base, but small companies will suffer. We are willing to pay tax, but I can’t see how this so-called single stage tax is any better than GST. - Mkini