HEADLINE INFLATION EXPECTED TO DROP TO 2PC

It depends on how SST’s impact is absorbed by economy, says Lim

MALAYSIA’S headline inflation is expected to ease to two per cent this year despite the reintroduction of the Sales and Services Tax (SST) tomorrow.

Last year, the country’s headline inflation was 3.7 per cent.

“If we can keep it around two per cent, I think that will be good enough. It may go down lower,” Finance Minister Lim Guan Eng said here yesterday.

“However, it all depends on how the impact of SST is absorbed by the economy and whether there is any illegal profiteering.”

Bernama reported that Customs Department director-general Datuk T. Subromaniam said that items purchased during the tax-free period would still be taxed if they were delivered after the SST re-implementation.

This, he said, was in accordance with the law, as a service performed after the date of implementation was subject to tax.

He said: “It is not free as it has been stated in the law.”

Subromaniam was commenting on cash rebates and discounts offered by various companies during the tax-free period, enticing consumers to take advantage of the situation to buy big-ticket items, such as cars.

He said tax was only one of the components that influenced prices, adding that there were many other determining factors.

“We will cooperate with the Domestic Trade and Consumer Affairs Ministry to monitor the prices after the SST implementation this Saturday,” he said.

Only 38 per cent of the consumer price index goods would be taxed under SST, compared with 60 per cent under the Goods and Services Tax (GST).

Under the SST, 85 per cent of businesses, especially small and medium enterprises, would be out of the tax net, while the annual sales threshold to register for the sales tax would be increased to RM1.5 million.

So far, 79,996 businesses had registered with the Customs Department through Auto Transfer System from MyGST to MySST.