KUALA LUMPUR: The two percent increase in sales and service tax (SST) will still protect consumers and avoid stoking inflationary pressures.
Financial specialist Amirul Firdaus Iskandar said the decision to raise the tax was a strategic move by the government to bolster revenue, and it could only bring about good things.
"When it comes to the services-related and inter-business activities, the impact of the increase in this tax is anticipated to be minimal.
"The impacts will not unduly burden consumers or stoke inflationary pressures," he told the New Straits Times.
Amirul said instead, the hike in SST would prove to be a boon for the country's income.
"The SST hike is expected to significantly contribute to revenue generation, its impact on inflation and consumer spending is projected to be well-contained, in line with the government's objectives," he added.
Prime Minister Datuk Seri Anwar Ibrahim today said that inflation will not be significantly affected by the two percent hike in the SST which came into effect on March 1.
He said around RM3 billion in revenue will be generated from the increase in the SST from six to eight per cent.
He had also said that the increase in SST is mostly targeted at discretionary and service-related interbusiness transactions that have little direct effect on customers.