Yesterday’s announcement by the new government that the goods and services tax (GST) is to be set at 0% on June 1 did not mention the sales and services tax (SST), which is the tax regime used before GST kicked in on April 2015. Replacing GST with SST was one of Pakatan Harapan’s main election promises.
The announcement of zero-rating GST without mentioning SST led to uncertainty and no shortage of speculation, including one claiming that there will be no tax for the first two years of the PH administration. That has been denied by the ministry of finance (MoF), which released a statement touching on fiscal reform and SST this morning. It’s a brief explanation on how the country will cope without the significant revenue contribution from GST, which stood at RM44 billion in 2017.
According to the MoF, the fiscal reform programme is underway. “The shortfall from GST which is to be zero-rated effective June 1, will be cushioned by specific revenue and expenditure measures that shall be announced in due course,” it said in the statement.
“SST will be reintroduced. The lowering of expenditure will begin with rationalisation, efficiency measures and reduction in wastage,” the ministry added, without mentioning any tax rate or start date.
Besides the above, the MoF also said that current crude oil prices have gone up significantly from the Budget 2018 estimation US$52 (RM206) per barrel, and this will provide a buffer for the immediate future. “Fiscal responsibility, transparency and governance will be main considerations in the implementation of fiscal reform,” it said. Brent crude is currently hovering just below the US$80 per barrel mark.
The return of SST to replace GST was never in doubt, as the government can’t run on air and the markets and rating agencies are watching closely. What’s also certain is that car prices will most certainly go down come June 1 with 0% GST, before having to be raised again when SST is reinstated.
to safeguard buyers against price fluctuations
As such, there should be a “tax-free window” after June 1 until the date SST kicks in, unless the government announces a start date for SST that coincides with the GST zero rating. It has two weeks to do so to avoid the fall and rise of car prices.
If the new SST rate is 10%, as it was before GST came into play, we could be seeing an increase in car prices compared to today’s sticker prices. If one recalls, car prices largely came down on April 1, 2015, when GST replaced SST. We were reminded of this earlier this week by Edaran Tan Chong Motor’s sales and marketing director Christopher Tan.
“Almost every brand, when we migrated from sales tax to GST, their prices actually came down a little bit. So if the situation is such that if the sales tax implemented will be exactly the same as before, there could actually be a price increase. What I can say for now is that perhaps now is the best time to buy, because if that happens you could be paying a slightly higher price in the future,” he said on Monday at the launch of the new Nissan Serena S-Hybrid.
Another potential surprise for the car buying public is that prices might not fall by exactly 6% come June 1. An industry source told paultan.org that buyers might not see a 6% drop for all brands immediately, as carmakers have paid GST all along the production and distribution process, and the layered tax isn’t just charged to the carbuyer in one lump sum.
However, the input tax that has been paid along the chain for existing inventory by the manufacturer and distributor can be claimed back from the government, and in a relatively short period at that. Thus, within a quick time frame, buyers should be able to pay current prices sans GST. That is if SST hasn’t come back in by then.
Read our in-depth article on GST and its impact on Malaysia’s automotive industry, with views from customs department director-general Datuk Subromaniam Tholasy and Malaysian Automotive Association president Datuk Aishah Ahmad.
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Syukur …No GST no problem.
When car prices are finalised, u all still have to buy local car like Proton. Hope to buy foreign cars? Dream on…
I don’t care whether a good government reduces car price or not, most importantly it must be a good government. Adil.
I suspect, even if all taxes are removed, an S-class will still cost RM 600k (and 740Le), and a Honda City will still cost RM 90K. That’s the reluctance.
Plenty of excuses.
During the first generation CRV time, the CRV price was astronomical to me. What is a CRV compared to X7 ?
Tell yourself, you can.
Now Pakatan got to repair all the corrupted practices of the previous Government.
I hope Pakatan don’t forget the RM 4 billion land Proton lost to kroni DRB.
Poor Prootn, had a RM4 billion land in Shah Alam, with a Gross Development Value of about RM12 billion. Then now, it is fully in DRB hands
Pakatan needs to investigate this so that they can use this money to save Proton
70% local uni grads choose to buy foreign cars. Incl all my course mates… kriks2
Now it is not a good time to buy a car. The GST and SST are uncertain times.
But forget this GST and SST which will be sorted in June. More importantly, one of Pakatan’s manifestos is to reduce car prices by 30%.
You see, before BN made this promise of reducing car prices by 30% (which they never honoured), Pakatan, through their campaign “Turunkan Harga Kereta” also made this promise before BN did. This is why BN copied Pakatan’s promise to reduce car prices.
Remember the campaign “Turunkan Harga Kereta” which we all put yellow stickers behind our cars? I think the campaign was strongly supported by Rafizi also.
So, these are uncertain times. Pakatan Government will reduce car prices by 30% and honour their campaign promises.
So, these are uncertain times. Even after June, if you buy a car, the same car might be 30% less later in this year.
You buy RM100k now, later in the year, when the same brand new car is sold for RM70k, you will cry like a newborn baby with his pampers on
When reduced the prices. Komplen pulak no RV. Better naikkan harga je la.
Syukur?? GST @6% gone and now SST back @10%.do the math
hopefully no lo, coz pre gst car price is higher.
Some people still think after abolish gst car price can go lower …. haha
For those who dun like higher car prices, u can always hold ur buying and wait for 5 years to UBAH back to BN
TangkapNajib50
High car price due to weak RM caused by Corruption scandals.
we need to talk about MAI please
Indeed. MAI, SPAD & MIMOS dinosars in room.
What about imported cars? Does SST apply on imported cars as well? Since is not produced locally.
Yes it applies.
Up 4% only, I don’t mind.
When want decrease the excess duty?
You can try to console yourself now but people voted based on all the good election promises. That’s it guys, car price reduction is not gonna happen in our lifetime.
Who voted for ”the good election promises”?
Vote who also can, asalkan bukan umno
Car prices will be affected when the tax structure is different as the present Gomen is trying to implement what they preach according to their manifesto.
Lets give our new Gomen some time to iron out the final details of the prices before we jump the conclusion.
I rather wait. With a good Government now, our ringgit will strengthen, thus eventually after a year, prices should fall further
Why buy now when there is turmoil and just only the Government has changed. A bit kelam kabut now. SST and GST also not sorted out yet.
Many korup will go to jail. Sales of cars also will drop a lot cause many have no free flow of money to use to buy cars.
So demand and supply. Car prices will fall substantially cause now, people have to work hard for their money. And they will think many times before buying a car.
During dirty days, money easy come, easy go.
Suggest to the new ruler to look into restructuring vehicle tax to be based upon the vehicle power output kilowatt and pollution index. No more ancient formula based on internal combustion engine size cubic centimeters ok
Pollution index- Yes! Power output- hell no! In that case, you will be paying a lot for a green powerful car like Tesla LOL! or even a hybrid…
Yes, I think taxing based on engine size is discriminating against N.A in favour of turbos but taxing based on power is a just as nuisance. I would say pollution index and fuel consumption is more realistic…get rid of obsolete unclean diesel and some thirsty dinosaur N.A. The company making cleaner engines like Mazda should be receiving lighter taxes
Green rebates for low emission car. Beres!
Zero emission car like Tesla enjoys rebate and incentives!
No drop in fuel prices yet car prices will be increased? Kena kencing lagi..
Kalau itu org menang, ini minggu minyak sudah naik tau.
Malaysians now gotta buy expensive cars due to choosing kerajaan tak prihatin. Oh wai…
Tax the rich no problemo.
GST bantu kurangkan harga barangan.
Rakyat boleh menikmati barangan dan perkhidmatan yang jauh lebih murah.
Out of many great things happened in the past week, this is the only regressive move we got. Too bad GST have been fearmongered by the former opposition that now it bites them back.
Government shouldn’t relying on oil deposits forever. Especially when we no longer net exporter.
Win 1st, deal with the promise later, and then rakyat will bear the consequences sooner rather than later.
If tax is the only way to developed country , then we should have a Communist government , let the gov managed all the country resources
So basically what happened after the new regime takeover is not as expected/dreamed/hoped? i.e NO GST (not zelo oni but it is still there), no tolls the next day from govt, lower car prices, free EPL matches on RTM etc.
Interesting times ahead..grabbing popcorn..
Wait a minute, now the situation is totally opposite la is not? That PH supporters now are all machai gahman makan dedak if they claimed to be OK’ed with whatever happened to them?
The price will be balance with the demand.
If the demand slow the price had to reduce by the manufacturer.
GST or SST…. government job is to make things easier. GST if done right could really benefit the market but the previous government did not do such a good work, they were not able to refund the claims of the other company causing a lot company working capital stuck.
TBH, I don’t mind if they go back on their promise and kept GST. It’s a superior system compared to SST.
Plus, I don’t miss the days when the price displayed for McChicken was not what you have to pay, have to add tax first.
ABCDGST, tak ada GST sekarang kena pula SST……
let’s see.
when SST > GST, either drop little bit in price or hike price, reason given by auto sellers, many factors affect the pricing
now GST > SST, i foresee another round of increasing price again, the reason given by auto sellers: GST 6% SST 10% mah
meh
All the material costs are of GST free, thus total finished goods/cost is lower,the govt approved price should also be revised to be lower before sales tax. Beside, do also yr social responsibility to stimulate the market by giving a daring price reduction for the new era!
I believe when GST was implemented, lots of good companies rather close down here and continue in other countries. The old govt didn’t do a good job.
They cannot lari cukai, so lari
lol gg
so when SST comes back the car price will increase more then the gst price?
Buy now
so much for people choice eh? lol