KUALA LUMPUR: Retail Group Malaysia is finding it hard to gauge the impact of the increase in sales and service tax (SST) on the wider supply chain, given scarce details on implementation.
2024 Budget announced an increase in SST to eight per cent.
"Will it be a gradual increment (6.0 per cent, 7.0 per cent, 8.0 per cent over a period of time) instead of a one-time increment (6.0 per cent-8.0 per cent)?...The level of impact cannot be determined now," explained its managing director Tan Hai Hsin.
He however said, the increase in SST will definitely affect retail spending.
"Although foods, beverages and telecommunication sectors are not affected, the retail prices of F&B outlets will increase and this increment will affect the entire food supply chain, including importers, distributors, logistic companies, retail property owners," said Hai Hsin in response to the 2024 Budget announcement.
He also said the government imposing a 5 per cent to 10 per cent tax on luxury goods is similar to the proposed luxury tax that was supposed to be implemented by the second half of 2023.
"Generally, we do not expect it to affect retail spending. Consumers who are prepared to pay for luxury brands will still be willing to do so with small increments," said Hai Hsin.
He further explained that the 2024 Budget text lacks specific definitions of high-value goods, such as iPhones, imported sofas, and limited edition sneakers, which could potentially be considered luxury items.
"No details have been given on what are considered high-value goods. Is the iPhone a high-valued good? Is an imported sofa of more than RM10,000 a luxury item? Is a limited edition pair of sneakers of more than RM1,500 a high-end good?," Hai Hsin added.