One hand gives and the other takes away.

The Malaysian government abolished their unpopular Goods and Services Tax (GST) on June 1, 2018, fulfilling a campaign pledge.

New tax

But now the government has introduced a new Sales and Services Tax (SST) instead.

On Aug. 28, the Yang di-Pertuan Agong Sultan Muhammad V gave his approval for the legislation, paving the way for it to take effect on Sept. 1, 2018.

The SST will impose a five to ten per cent tax on the sale of goods, and a six per cent levy on services.

Said Finance Minister Lim Guan Eng:

"The Finance Ministry would like to express its gratitude to the Yang di-Pertuan Agong over his approval to implement SST, which is in-line with PH’s commitment in fulfilling its election manifesto."

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Exemptions

During a media briefing on Aug. 30, it was revealed that 5,443 goods are exempted from the SST, including rice, cooking oil, bread, newspapers, wheelchairs and medicine.

Menstrual hygiene products such as tampons and sanitary pads have also been exempted.

It was previously subject to the GST under the Barisan Nasional government.

Reactions were mixed, with some netizens unhappy with certain other items being taxed:

https://twitter.com/AikaG/status/1033715871061929984

Others were concerned that the SST would not help in bringing down the cost of goods:

https://twitter.com/Sarahzhrr/status/1033994710413541376

The tweet reads:

"From 6 per cent tax jumped to 10 per cent tax. Do you believe that businesses will lower the price of goods? They'd maintain the price, then put the blame on SST."

In response to an New Straits Times report on Lim's comment that the SST would not lead to significant price changes, this netizen said:

And some were unconvinced of the need to repeal the old system and replace it with a new one:

https://twitter.com/norzareqputra/status/1035110241023680512

Budget concerns

The SST is expected to bring in less revenue for the government than the previous GST.

Lim mentioned that the SST was expected to bring in around RM21 billion (S$6.98 billion), as opposed to RM44 billion (S$14.6 billion) under the GST.

He added that this was intended to reduce the cost-of-living in Malaysia.

This move could therefore place more pressure on the government's aim to reduce their debt burden, which currently stands at about RM1 trillion (~ S$335 billion).

Top image from Lim Guan Eng's Facebook page.