The government expects to receive an additional RM3 billion in revenue next year. This is because the service tax is raised from 6% to 8%, according to Treasury Secretary-General Datuk Johan Mahmood Merican.
“As previously stated, the Ministry of Finance currently estimates that it will receive RM3 billion from the step related to the service tax,” he said today at the Malaysian Economic Association (MEA) following a post-Budget 2024 debate.
Prime Minister announced that the government planned to raise the service tax from 6% to 8% in the 2024 budget.
However, the rise does not apply to services such as food and beverages or telecommunications.
In terms of subsidy elimination, Johan stated that the government cannot withdraw all subsidies at once due to the impact on individuals and businesses.
“I think the logic behind why we can’t eliminate all subsidies at once is that if it’s implemented, it will affect the people in terms of the cost of living challenges.”Second, in terms of the influence on enterprises, it may have an impact on investment and growth. Among the planned steps, as outlined by the Prime Minister in the latest budget presentation, are the withdrawal of subsidies for poultry and eggs after taking into account the stable supply situation.
“The government is also continuing the targeted subsidy for electricity and further on diesel,” the minister said.
Previously, Anwar stated that the government would continue to provide subsidies to the people. However, underlined the importance of targeting in order to eliminate leakages and guarantee that only eligible residents benefit.
He claimed that the government’s current subsidy package benefited the “ultra-rich” as well as 3.5 million foreigners.
The government may be compelled to provide RM81 billion in subsidies this year, the biggest amount in the world.
Anwar also stated that 3.5 million foreigners and 10% of the wealthy enjoyed goods such as oil, poultry, and power. Those who smuggle them out were not included.
As a result, he emphasised the importance of developing proper strategies for targeted subsidies in order to prevent leakages.
