The High Value Goods Tax (HVGT) tax is in its final stage of policy formulation, the Ministry of Finance said today less than two months away from the tax being implemented in May, this year.
Prime Minister Datuk Seri Anwar Ibrahim said several policies for HVGT, or more commonly known as the Luxury Goods Tax, are being finalised, including determining the types of goods that are subject to the tax and establishing price thresholds that define high-value goods.
“This policy needs to be explored and determined to ensure there is no additional impact on low-income groups.”
Anwar, who is also the Finance Minister, responded in writing to a question raised by Roslan Hashim [Kulim] on the details of the luxury tax and whether the tax threshold of RM10,000 on the gold jewellery industry will affect low and middle incomes.
The luxury goods tax was announced by Anwar when he delivered the 2024 budget on Oct 13 last year, with a tax rate between 5% and 10%. The government estimates that the proposed luxury goods tax will bring in additional revenue of RM700 million per year.
Separately on the impact of the ringgit depreciation on economic performance, Anwar pointed out that the depreciation of the ringgit will have a greater impact on imported goods, including food products such as meat and dairy products, seafood, vegetables and fruits.
“The government is aware that B40 households are more vulnerable to the depreciation of the ringgit as they spend more on food, which accounts for 35.4% of total expenditure, And, due to the higher value of imports, this makes the B40segment more sensitive to the currency’s exchange rate.”
“However, global commodity prices have stabilised slightly, helping to mitigate the impact of ringgit depreciation on inflation,” adding, as Malaysia is an exporting country, currency depreciation can bring in foreign exchange gains.
“However, the government is aware that a weaker ringgit will impact the cost of goods while reducing households’ disposable income and savings.”
Anwar believes the Payung Rahmah programme will be able to assist the vulnerable and the government will continue to control prices and subsidise basic necessities such as food and fuel. In order to increase the sustainable income of households, the government is committed to creating more high-skilled employment opportunities and supporting high-productivity employment.
