Treasury secretary general Datuk Johan Mahmood Merican (left) and Second Finance Minister Datuk Seri Amir Hamzah Azizan. Amir Hamzah on Monday officiated the launching ceremony of special government guarantee schemes by Syarikat Jaminan Pembiayaan Perniagaan Bhd and Syarikat Jaminan Kredit Perumahan Bhd. (Photo by Shahrin Yahya/The Edge)

KUALA LUMPUR (March 4): The government will improve its communication with stakeholders before introducing new tax measures going forward, to avoid repetition of confusion arising from the hike in the service tax to 8% from 6% last week, said Second Finance Minister Datuk Seri Amir Hamzah Azizan.

“Well, when you look at it, the service tax increase from 6% to 8% was introduced and announced around Budget 2024, and actually, there was a lot of consultation done with various groups to ensure that we figured out what are the key things.

“At the same time, as anything that goes out, sometimes communications could be a little bit better, and we recognise that we should do a little bit more on that side,” he told reporters here after officiating the launching ceremony of special government guarantee schemes by Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) and Syarikat Jaminan Kredit Perumahan Bhd (SJKP).

Amir Hamzah reiterated that the revision of the service tax rate is good to enhance government revenue, and redistribute proceeds raised to help those in the lower end of society.

“I know people talk a little bit about where we are putting it but, say, for something very, very basic last year, there were a lot of programmes to fix toilets for schools. We put back money also to help government servants who are staying in our quarters, [including the] police or armed forces, who were living in very bad conditions. We fixed their quarters along the way.

“[This] sounds a bit strange, but actually, the toilets for schools are very important, because we all want our children to go to school in a better condition, so that their minds are about: ‘how do I improve myself, how do I get better education, and so on’, not worrying about ‘I don't want to go to the toilet, because it is really smelly’ and all that,” he explained.

“This redistribution based on an increase in revenue is actually very, very good, because it is actually about helping society at large,” he added.

Public urged to flag profiteering after service tax hike

Although Amir Hamzah said the increase in the service tax may induce profiteering activities, he was relieved that the Ministry of Domestic Trade and Cost of Living had pledged to step up its enforcement to curb unaffected businesses from exploiting the higher tax rate by raising prices.

“I think a lot of Malaysians also can play their part to highlight where they feel that prices have been raised [but] not consistent with the increase in the service tax,” he said.

Asked if the government would consider a more streamlined tax structure like the goods and services tax (GST), Amir Hamzah said it takes time to deliberate on a larger tax regime change, hence the government is focusing on the available tools accessible to it in seeking higher revenue.

“I think the GST is the tax structure that we always continue to look at, and it will take some time before we review everything. But at this point of time, our focus is actually with the tools that we actually have. And the tools which we actually have are tools such as the SST (sales and service tax) and so on,” he said.

Earlier on Monday, SJPP and SJKP announced that they had started receiving applications for Budget 2024 government guarantee schemes worth RM20 billion for micro, small and medium enterprises (MSMEs), and RM10 billion for first-time homebuyers without fixed income.

Amir Hamzah updated that SJPP is providing guarantees to over 100,000 MSMEs for financing worth RM75 billion since its incorporation in 2009.

“The NPL (non-performing loan) that was in SJPP back then, when we started, was a bit higher. At that time, it was a bit less than 7%. But now, because the scheme has gotten better, people understand that the credit control has gotten better — it is less than 2%. It is at a level where it can be self-sustained,” he said.