Customs director-general Subromaniam Tholasy said the SST had a much narrower tax base than the GST, though it would be slightly broader than the previous SST.
“Under SST, only manufacturers and service providers are subjected to the tax and even then not all of them because in terms of scope and coverage, it is much less than the GST.
“A majority of items are 0% rated, some are 5% and some are 10%. Why should prices go up, everything being equal?” he told reporters today.
He said the list of SST-exempted items is available on the Customs website.
On the impact on prices, Subromaniam said tax was only one component of pricing.
“Many factors are outside our control, prices are dynamic, it depends on supply and demand, fuel prices, we don’t know.”
“Dont just blame tax on prices, there are other factors. But I urge traders not to take advantage of the SST’s implementation to raise prices.”
Subromaniam also said SST was simpler than the GST.
“If we can implement the GST, there is no reason why we can’t implement SST,” he said, adding that there were bound to be some hiccups.
He said filings and payments for the tax would be simpler and could be conducted electronically, compared to the previous SST which had to be done manually.
He said a new internet-based system will be introduced next month, and all businesses subjected to the tax will be registered automatically from the GST database.
He said this meant there would be no additional costs to businesses, while for those which needed to include the SST in their billings, they could reconfigure their current billing system.
He said while the GST was a good way to curb the so-called “shadow economy”, the consumption tax had “caught everyone in the net”.
The shadow economy has often been used to refer to business transactions – for goods and services produced alongside those in the formal economy – that are paid for in cash and not declared for tax.
Monies in the shadow economy include illicit funds from corruption, illegal gambling, drug trafficking and smuggling activities.
“When we had the GST, we got all the data of over 470,000 traders. With SST less than 100,000 traders are involved.
“But we can still monitor because we know who they are,” he said.
The government is set to introduce the SST at rates of 5% and 10% for selected goods and 6% for services on Sept 1, replacing the 6% GST which was introduced on April 1, 2015.