PETALING JAYA: The 2% rise in the sales and service tax (SST) to 8% is expected to adversely impact consumers despite the exemption on food and beverage (F&B) outlets as supply chains are integrated, say financial experts.
Wealth Vantage Advisory managing director Rafiq Hidayat said the hike in the SST rate under Budget 2024 will make its way into food prices, and in turn, affect the net income of households to spend.
“The prime minister announced that SST is not going to touch F&B, but with logistics and cost of all other supply chains (being integrated), it will make its way towards increased food prices one way or another,” he argued.
He added when the prices at restaurants increase, then people will eat out less. “Then you will have restaurants closing down which will affect suppliers, (restaurant) workers, etc. It will have a chain effect.
“I do not know how fast it will be, but it will have an effect,” he said at the Financial Planning Association of Malaysia’s post-Budget 2024 media roundtable today.
Bill Morrisons executive director Idi Irwan said the majority of small and medium-sized enterprises (SMEs) are also facing pressure in terms of trying to maintain their profits.
“With the introduction of SST, obviously the easy way for all these SMEs is to transfer back the burden to the rakyat.
Therefore, the people will have to fork out additional money to enjoy all these services.
“The majority probably will feel the pinch and focus on something else that they can actually afford. Then the chain effect will start and all these businesses will start closing down one by one,” he warned.
Meanwhile, Rafiq said the progressive wage model (PWM) should have been tabled in Budget 2024. He said this was the one thing he hoped Anwar, who is also finance minister, would have mentioned in his Budget 2024 speech.
“I wished he would have said a bit more (about PWM) in Budget 2024 but there wasn’t any mention of it,” he said.
The PWM was approved at the Cabinet level earlier this year. However, details of its implementation and impact it will have on various sectors still remains largely a mystery.
The PWM is a wage structure to increase wages of workers through upgrading skills and improving productivity.
Source: https://www.freemalaysiatoday.com/category/highlight/2023/10/16/sst-hike-to-8-will-hit-consumers-eateries-indirectly/