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Friday, June 29, 2018

SST rate of over 4% will lead to inflation, says Mydin boss

Ameer Ali Mydin says the hypermarket will not absorb the SST after losing RM100 million when trying to absorb the GST.
Ameer Ali Mydin says retailers cannot be expected to absorb SST as margins are low and the market is very competitive. (Bernama pic)
KUALA LUMPUR: Prominent businessman Ameer Ali Mydin says that a sales and services tax (SST) rate of more than 4% will surely lead to inflation.
His response came after Finance Minister Lim Guan Eng was reported as saying yesterday that the tax, which will come into force on Sept 1, will not lead to inflation.
“As a seasoned businessman, I beg to differ,” said Ameer on the sidelines of a talk titled “Cost of living in Malaysia: Asking the right policy questions”.
Ameer, who is the managing director of the Mydin hypermarket chain, told FMT that businesses could only try to absorb the tax if it was at 3% to 4%.
The government has yet to announce the SST rate. In the past, the SST was 10% but it was replaced by the 6% goods and services tax (GST) which was introduced in 2015 by the previous administration. The GST was zero-rated on June 1.
Ameer said that a lower SST rate would also make sense in terms of compliance as businesses would be more likely to pay the tax at the import or manufacturing point than find loopholes to avoid paying the tax as they did in the past.
“Retailers cannot be expected to absorb everything. Retailers don’t make hundreds of millions in profits yearly because the margins are low and the market is very competitive.
“It is very unlikely that anyone will absorb the tax.”
Ameer said that Mydin would not be absorbing the SST, like how it had tried to do with the GST.
“When the GST was introduced, we absorbed it for a while. We wanted to see if it was viable for us to do so.
“But we stopped because we lost over RM100 million. So, for the SST, we won’t be absorbing the tax.”
Previously, critics of GST said the tax caused inflation and higher prices.
But others said it could not be solely blamed for the higher cost of living as there were other factors and this was reflected in the Consumer Price Index (CPI). - FMT

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