SST exemption on T&CM services welcome; Prudence needed in government decisions
KOTA KINABALU: MCA welcomes the government’s decision to rescind slapping traditional and complementary medicine (T&CM) practitioners with a 8% Sales and Service Tax (SST) on services with a turnover that exceed RM500,000 annually.
Its Deputy Secretary General, Datuk Dr Pamela Yong, said this SST requirement issued back in December 2023 had earlier raised concerns among service providers and patients. Calls were made to the government to treat T&CM care on an equal level as with modern medical care, and to thus, exempt T&CM services from being slapped with taxes.
Albeit the government taking months to U-turn on its decision with fates of T&CM practitioners and patients hanging in the air, this latest SST exemption announcement by Minister of Finance II Senator Datuk Seri Amir Hamzah Azizan nevertheless comes as a relief for this Lunar New Year, she said in a statement.
“While MCA appreciates that the government took heed and adopted suggestions from MCA and other stakeholders, the party however hopes that such unnecessary angst-causing situations could be avoided in the future should the Madani government exercise decision-making with utmost due diligence and prudence.
“According to data from the Ministry of Health (MoH), as of January this year, a total of 6,888 T&CM practitioners were registered as required by law. Traditional Chinese medicine practitioners accounted for more than 4,000, or two-thirds. These figures suggest that the government’s initial intention would have affected a certain segment in society with taxes by a larger extent.
“Nevertheless, MCA still welcomes the government move to accede to public opinion. Simultaneously, MCA has repeatedly recommended to the government to reinstate the GST set at a new rate of 4%,” she said.
MCA President Datuk Seri Dr Wee Ka Siong has also recently highlighted that the GST is a far more efficient tax system than the SST.
According to Pamela, the GST enhances our country’s finances, increases our government’s revenue and enables the provision of subsidies for daily essentials.
The abolishment of the GST by the PH government in 2018 resulted in a significant revenue shortfall as a recent article published by the Institute of Strategic Analysis and Policy Research (INSAP) highlighted that the GST generated a robust RM44 billion in 2017, contributing significantly to the national coffers.
It has been estimated that had the GST not been abolished, GST would have collected around RM63.5 billion instead of RM35.8 billion from SST in 2024.
With data showing that the outdated SST tax system is ineffective in expanding the national revenue, she said this may explain why the government feels the need to introduce a slew of new taxes or raise the tax percentage to top up the treasury.