ALOR STAR: The Consumers Association of Kedah (Cake) has called on the government to conduct a thorough study on the impact of the two per cent service tax hike on consumers.
In expressing concern over the snowball effect of the tax hike on end users, Cake president Yusrizal Yusoff said a comprehensive study is vital to determine its impact on vulnerable groups.
He pointed out that there were consumers in the B40 and M40 who will likely to be affected by the service tax hike on electricity bills.
"Consumers among B40, M40 also have their electricity bills over RM220 per month and will likely see their monthly bill increase to RM237 following the tax hike.
"For example, under the current dry spell in Kedah, it is inevitable for the bill amount to soar although consumers are anything possible to manage electricity usage.
"Hence, the tax hike will have an impact on the consumers' pocket," he told said when contacted.
Yusrizal also expressed Cake's concerns over the possible overlapping of tax payments since the Sales and Services Tax (SST) is an unstructured tax regime.
"In 2015 we were given a briefing by the then government that SST is a non-structured tax regime and that was the reason the government had introduced the Goods and Services Tax (GST).
"Perhaps, this current government is reluctant to reintroduce GST because they had fought tooth and nail to reject the GST but the issue here is the SST hike is not a properly structured tax system.
"It is a harsh taxation system.We don't really know the burden of the tax will be shouldered by which party. Unlike the GST, we can't really tell what will happen after the SST being increased to 8 per cent.
"Will there be an overlapping tax system? Will it lead towards compounding tax of up to 16 per cent of even up to 30 per cent?
"We are worried that wholesalers will impose the tax on the retailers and they pass down the additional cost to consumers," he said.
Yusrizal added that the timing of the government's move to expand and increase the tax rate now was unfortnate, as it is nearing the month of Ramadan and is followed by the Hari Raya festive season.
"For us this is not the right time for the government to revise upward the SST because the government has not done a comprehensive study on the impact of the hike.
"We are worried businesses will increase prices at their whim and fancy (for Ramadan and Hari Raya)," he said.
Yusrizal said this would increase the burden on the people who are already suffering from the high cost of living due to the hike in prices of essential items, the water tariff increase, rental hikes, the lack of local white rice and so on.
He also questioned why the hike was introduced despite the government having yet to announce a clear mechanism on targeted subsidy distribution.
On Tuesday, the Energy Transition and Water Transformation Ministry issued a statement to clarify that almost 85 per cent of domestic consumers living in the peninsula will not be affected by the service tax hike from six to eight per cent.
The ministry said the government's decision on taxation reforms was not applicable to a vast majority of consumers, who would not feel the pinch when paying for utilities.
