“Tax the rich,” the Rakyat says.

After the SST expansion in June, which saw more everyday items like salmon, avocados, imported fruits, and yogurt being taxed, many Malaysians hoped the government would shift focus to taxing the wealthy, to ease the load on regular folks. But that didn’t quite happen.

The SST expansion is just one part of the government’s broader effort to reform Malaysia’s tax system under the MADANI framework. Other changes include removing diesel subsidies, introducing the Low Value Goods Tax (LVGT) for online purchases, and proposing to cut petrol subsidies for the top 15% of income earners.

These moves, while important for long-term fiscal stability, have caused public frustration — especially after the government recently scrapped plans for the long-awaited luxury tax.

Initially tabled by Anwar himself in 2023, the tax was meant to slap a 5-10% charge on cars above RM200,000, watches over RM20,000, jewelry beyond RM10,000, and other non-essential high-end goods.

It was scheduled to take effect on 1 May 2024 and expected to raise RM700 million annually.

However, after multiple delays, the government has decided to drop the idea completely.

Their reasoning? The expanded SST already taxes luxury goods, just not under the "luxury" label. Depending on how the item is classified, it still gets hit with a 5–10% tax.

The government also cited practical challenges. Setting up a new tax system is complicated, and applying both SST and a luxury tax could mean some goods are taxed twice, which would be unfair and confusing.

Needless to say, the decision was not taken lightly by citizens.

Many Malaysians took to social media, voicing anger that the administration is protecting the rich. Some accused the government of recycling ideas from previous administrations and ignoring public frustration.

Businesses, on the other hand, breathed a sigh of relief.

The luxury tax faced strong opposition from industry players, especially those in the jewelry and luxury retail sectors. Concerns included a low pricing threshold (the price point at which the tax would kick in) that could hurt local businesses and SMEs.

There were also fears that the tax could discourage high-value consumer spending and deter foreign tourists, particularly those drawn to Malaysia for luxury shopping.

But here’s something that the administration did not tell you: it’s tough to tax the rich.

Unlike the average person, wealthy individuals can move their money around easily. Capital (ie. wealth, savings, and investments) is highly mobile. This isn’t just a Malaysian issue; it’s a global one.

Let’s say we place high taxes on luxury goods. Tourists might just stop coming to Malaysia and spend their money elsewhere like Singapore, Thailand, or Dubai. That’s a big loss for our local economy.

On the other hand, it’s a lot harder for everyday people to move. We still need to buy groceries, pay utility bills, and go to work. That’s why it’s “easier” to tax the average citizen, because we don’t have the same flexibility.

Taxing the rich also comes with longer-term risks:

• It may reduce investment and entrepreneurship, which affects job creation and economic growth.

• Wealthy individuals could end up being taxed multiple times through different policies, lowering their real returns and pushing them to invest abroad.

• Countries are in constant competition to attract and keep wealthy people and investors. If the tax rate is too high, capital will simply leave — and it’s not easy to bring back.

That’s the harsh reality of capitalism.

So, what does this mean for you?

You won't see a separate "luxury tax" at checkout, but expect slightly higher prices on premium goods due to adjusted SST.

Tourists and high-end shoppers may not be discouraged by a separate tax line but should expect slightly higher prices on select goods.

Something else you need to know: TNB’s new pricing scheme allows you to save 5-7% on your electricity bills.

The Time of Use (ToU) pricing scheme is part of TNB’s tariff restructuring.

By opting in, you’ll receive lower rates during off-peak hours, but slightly higher rates during peak hours. For public holidays and weekends, you’ll be charged at off-peak rates, so there’s 48 hours to take advantage of lower rates.

Knowing this pricing scheme, you can adjust your habits to reduce your bills:

• On aircond only after 10 pm

• Wash clothes after 10 pm (or before going to work in the morning)

• Prep meals during weekends or at night

• Charge your EV vehicles after 10 pm

The whole idea is to shift high electricity consumption to off-peak hours (10 pm - 2 pm).

How much can I possibly save?

Assuming your electricity usage is 500 kWh, you can save up to 7% on your bills by using electricity off-peak.

For the maximum savings, you’ll have to use 90% during off-peak hours.

How do I apply for this scheme?

Head over to TNB’s website and download the ToU tariff form.

Fill in the details and prepare a copy of your myKad, then email them to [email protected]

THINGS TO NOTE BEFORE SWITCHING ⚠️

• There’s a one-off Stamp Duty charge of RM10. It will be reflected in the following month’s bill.

• You’ll need to have a smart meter installed. Login to the TNB portal to see your account type.

• Use the TNB Tariff Calculator to figure out how much you can save. Only switch if it’s cheaper.

If you’re not home for most of the day, you may as well switch to the new pricing scheme because most of your electricity usage will be at night (off-peak) anyway.

Thanks for reading till the end!

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