Scrapping High-Value Goods Tax Will Not Affect RM700 Mln Revenue Target – Economist
By Niam Seet Wei
KUALA LUMPUR, July 30 (Bernama) -- The government’s decision to halt the proposed high-value goods tax (HVGT), formerly known as the luxury goods tax, will not affect the RM700 million tax revenue expected from its implementation, said an economist.
Sunway University economics professor Dr Yeah Kim Leng said the move will instead ease concerns over the potential impact of the tax on consumer and tourist spending, as its incorporation into the existing expanded Sales and Service Tax (SST) has removed uncertainty over which items are subject to tax.
He explained that since the principles of the HVGT have been integrated into the expanded SST structure, where luxury and discretionary items are now taxed at five or 10 per cent, the rates are effectively the same as those proposed for the HVGT in Budget 2023.
“The revenue target will not be affected as the same SST rate will be applied without the need to define which goods are considered high value,” Yeah told Bernama.
The Ministry of Finance (MOF), in a written parliamentary reply on Tuesday, said the government has decided not to proceed with the HVGT implementation.
However, it said the principles of the HVGT have been retained under the revised sales tax structure, where luxury and discretionary goods are now taxed at five or 10 per cent.
The HVGT was first introduced in the revised Budget 2023, tabled by Prime Minister Datuk Seri Anwar Ibrahim in February 2023.
HVGT was initially scheduled for implementation in May 2024 with the proposed tax rates ranging from five per cent to 10 per cent. The government projected that this tax would generate an additional RM700 million in annual revenue.
-- BERNAMA