Government Service Tax increase to 6%

By LEONG KEE SIONG

Issue have minimal impact

The budget proposal is always been awaited by public on October, to hope for good news on financial goodie. On 15^th October 2010, the 2011 Budget tabled in front of parliament by our Prime Minister. However, 2011 Budget propose that the service tax will increase from 5% to 6% effective from 1st January, 2011, and the Government need not implement Goods and Services Tax (GST) next year. This is due to the budget theme “Transformation Towards a Developed and High-Income Nation”.

The government is confident that this measure will not excessively burden the rakyat as the increase in the tax rate is minimal. “The services tax is not imposed on all services,” Prime Minister Datuk Seri Mohd Najib Razak said in his 2011 Budget speech. Malaysia Retailer Association president Eddie Chan said. “The rakyat will not be happy with the increase in tax but it won't be felt as badly in the long-term.”

Tax hike add to health care cost

The increased tax is to apply to the hospital and will affect the health care cost. The health cost is to spend on build news hospital and medical facility, increase the number of doctors, nurses, supplies of medicine and equipment. The tax increased issue is impressive, but for those who seek medical assistance in private hospital will have to suffer the effect of the 6% service tax. The cause of people look to private sector for healthcare service is government hospital are seriously burden by all forms of shortages, therefore people looking for a greater need and in result they suffer from the increased service tax.

The issue have been seen in negative approach, because the cost of health care increase without doing effective check and research to its consequence on healthcare consumers. So, the government should address this issue of rising cost medical and health care, and prove it by fact. The tax increased issue is troublesome to public, due to the fact that the net taxable amount is actually 6%. Besides, the net total can be multiplied rapidly to further than the apparent 1% if spend on high expenses item or service such as medical assistance.

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