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Thursday, February 29, 2024

Why tax hike on electricity but not on water, telco bills - Wee


Wee Ka Siong (BN–Ayer Hitam) has questioned the government’s consistency in implementing the upcoming service tax hike from six to eight percent.

Speaking at a press conference in Parliament today, he asked why there will be a tax increase on electricity consumption but not on other sectors such as water or telecommunications.

“Yesterday, Finance Minister II (Amir Hamzah Azizan) announced that water bills will remain exempted from (the tax) and so is domestic electricity consumption of less than 600 kWh (electricity bills less than RM220 per month).

“What is weird is the rest of the services like telecommunications are (still) subject to a tax rate of six percent.

“Why is there a threshold value set for certain sectors but not others? If there is no threshold value for telecommunications, then we should do away with it (service tax on telecommunications),” Wee said.

This comes after Amir, in a statement yesterday, said the upcoming tax hike only affects discretionary services and business-to-business (B2B) activities and does not involve services that are necessities.

Finance Minister II Amir Hamzah Azizan

The example given was widely used services such as food and beverages, telecommunications, and parking remain subject to the existing six percent service tax rate.

As for electricity, the tax increase would only be on usage exceeding 600 kWh, and nearly 85 percent of electricity consumers in the country are below this threshold and thus would not be affected.

The service tax will also not be imposed on treated water services.

Electricity a necessity

Wee - who insisted on water and electricity being exempted from the tax - said it was perplexing why there would be a tax hike on electricity but not water when both are necessities.

The MCA president stressed that electricity tariffs have increased several times since last year.

“Why is the (tax) for electricity bills still being increased to eight percent?

“Why is the government so adamant in increasing the tax rate for electricity bills? The people are now suffering because of these compound increments.

“The weather is hot these days, many households have turned on their air-conditioners more often and are paying more than RM220 monthly for their electricity bills,” he said.

The former minister also pointed out that the tax increase will affect shops, factories, and warehouses and that costs will eventually trickle down to the people.

“Its impacts on the people are inevitable as the additional costs will be passed down and borne by consumers in the long run,” he added. - Mkini

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