KUALA LUMPUR, March 5 ― The improvement of the sales and service tax (SST) was an immediate step that allowed the government to focus on existing approaches in efforts to increase revenue and the country's fiscal position and at the same time not to burden the people, said Finance Minister II Datuk Seri Amir Hamzah Azizan.

He is confident that by improving the current tax system, the government could overcome certain leakages and that would help achieve its (fiscal) target.

"The important thing is that besides the government's ability to use the existing 'tools' that we can deal with almost immediately, we also look for ways to reduce the leakage in the existing system.

"Targeted subsidies is one of the most important focuses for the government because we have to reduce leakages and expenses in the current system,” he said during a question and answer session at Dewan Rakyat today.

He was replying to a question from Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal (PN-Bukit Gantang) regarding the possible re-implementation of the Goods and Services Tax (GST).

Amir Hamzah explained that GST does have a broad base, but it has a direct impact on the people, contrary to the aspirations of the government which takes a more progressive approach as a measure to increase the national income through several taxation reform measures.

The service tax component under the sales and service tax (SST) system were raised to eight per cent from six per cent starting March 1, except for food and beverage services, telecommunications and the provision of parking spaces.

"The move to exclude services such as food and drink is progressive, which reduces the impact of tax increases on the cost of living of the people,” he explained.

When asked about logistics services that are now subject to the rate hike, he said: "We do not impose any tax in areas where there is mediation... business to business (B2B).

"So if there is no B2B, no tax is charged in the context of the existing structure. For exporting companies, we do not impose SST so as not to pressure the existing economy,” he said.

At the same time, the government is also enacting new legislation to implement the High-Value Goods Tax (HVGT) at five per cent and ten per cent.

He added that the HVGT will be imposed based on a certain threshold value set for each item involved and is also progressive because it is imposed on those who can afford high-value items and does not burden the low-income group. ― Bernama