Return of GST will push car prices up 1% to 3%, says analyst

KUALA LUMPUR: Car prices in Malaysia are expected to increase by 1% to 3% should the government bring back the goods and services tax (GST), says an analyst.

Alex Goh of AmInvestment Bank Bhd said it would be the opposite effect to what happened after the implementation of the sales and service tax (SST) in 2018.

He said the real estate investment trust (REIT) and media sectors could also be impacted by the GST, while the property sector could be vulnerable to softer demand from higher product prices amid heightened affordability concerns.

“REITs could experience slower footfall and tenant sales growth on reduced consumer spending, while the media sector could suffer from lower subscribers and advertising expenditure (adex) spending,” he said in a note today.

However, Goh said most of the sectors, namely banks, oil and gas, plantation, telcos, power, healthcare, gloves, manufacturing, gaming, and technology, would see a zero-to-negligible impact from the GST.

“Essential food manufacturers such as Nestle could partly benefit from cash assistance to the bottom 40% income group (B40) and middle 40% income group (M40),” he said.

Prime Minister Ismail Sabri Yaakob was recently reported as saying that Malaysia is deliberating the reintroduction of GST to expand its revenue base and carry the weight of public subsidies.

He said that while he was aware of the negative perception surrounding the GST, the government had limited options to replenish the country’s coffers.

He said the government would aim for a GST rate that was not so high as before that it would burden the people, yet not so low that it “defeats the purpose of expanding tax revenue”, Goh noted.

In March, the finance ministry said it was evaluating the reintroduction of the GST as part of major fiscal reforms to strengthen the country’s revenue capacity.

Bank Negara Malaysia had also voiced its support for the reimplementation of the GST as that would relieve the heavy financial burden faced by the government.

Source: https://www.freemalaysiatoday.com/category/nation/2022/06/03/return-of-gst-will-push-car-prices-up-1-to-3-says-analyst/

Add a Comment

Your email address will not be published.