KUALA LUMPUR: The government’s decision to not impose the Sales and Service Tax (SST) on construction services and building materials is a smart move.
Malaysian Malay Contractors Association president Datuk Mokhtar Samad said it would reduce the burden facing the people and housing developers.
“There is no denying that GST was one of the main reasons why housing cost was rising,” he told the New Straits Times today.
“This is because GST was forcing developers to buy building materials at a much higher price and this had the impact of increasing the cost of housing for consumers.”
He was responding to Finance Minister Lim Guan Eng’s statement today that SST would not be imposed on construction services and building materials, to reduce housing costs.
Mokhtar said this would definitely lower the cost of building housing units.
“Previously, a piece of brick cost around 50 sen. Add three sen more under GST and you raise the price to 53 sen. The price of bricks is not fixed. It is dependent on production, weather and other elements, but GST remains fixed.
“It is also the same with the cement price. If cement costing RM10,000 is needed to build a house, under GST you need to add RM600 to the cost.
“If you take away the taxes, there will a lot of savings for developers and buyers.”
AmBank economic research head Dr Anthony Dass had said that SST was a one-level taxation system, which imposed tax on the producer, whereas GST was a multiple level tax that was imposed on goods and services at every production and distribution stage in the supply chain, including the import of goods and services.