It's not 16pct SST - deputy minister explains the mechanics

Deputy International Trade and Industry Minister Ong Kian Ming said adding up two different categories of the sales and services tax (SST) to 16 percent was a case of wrong calculation.

Ong, who formerly served as the special officer to the finance minister, said the 10 percent rate was specific to goods while the six percent is for services and should not be mixed up.

"I feel that there are many people who are confused about the SST, where sales tax will be 10 percent and services tax 6 percent.

"Actually the two taxes have their differences. The sales tax will only be charged on products which are made at the factory while services tax is only charged for services.

"So, we can’t just join it as 16 percent," he told journalists at the Parliament lobby today.

The Bangi MP noted this while there is a debate over whether the SST system will be better than the previous tax regime which uses the goods and services tax (GST) system at a rate of six percent.

However, Ong said a simple measure is to look at the total tax collection under each system.

"The GST generated a revenue of about RM42 billion a year for the government.

"But under the SST, only RM21 billion will be collected. I think this will benefit the rakyat as (the difference) is returned to the people," he said.

He added that many items that were previously taxed under the GST system will be exempted under the SST regime.

"The overall impact will be a lower cost of living," he said. - Mkini