Dr Wee calls govt to reconsider proposal to increase service tax on electricity bills

PETALING JAYA: The government has been urged to reconsider the proposed increase in service tax on electricity bills to alleviate financial strain on households and businesses, Datuk Seri Dr Wee Ka Siong tells the government.

MCA president Dr Wee said that this was important as the surge of approximately 40% in electricity bills due to the increase in Imbalance Cost Pass-Through (ICPT) rates for businesses last year were also felt by consumers.

“At the beginning of 2023, I spoke many times in Parliament about the increase of around 40% in electricity bills as a result of the increase in ICPT rates.

“This effect is not only felt by the business sector, but also the consumers because they are the ones who ultimately bear all the increase in costs,” he said in a statement on Friday (Jan 12).

Dr Wee also said that the impending increase in the service tax rate from 6% to 8% on electricity bills remained a concern despite the projected reduction of government’s burden to RM1.9bil for the first half of 2024 due to decreased fuel costs and changes in subsidies.

“Even though the value of service tax collection on electricity has increased since last year, the government still plans to increase the service tax rate from 6% to 8% starting March 2024.

“People’s lives are really difficult now. Would the government exempt the increase of service tax on electricity cost?” the former Cabinet member said, adding that the government should maintain the tax rate at 6%.

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He also called out the government for being inconsistent with the imposition of tax rates on services and utilities.

It was previously announced that the service tax rate will increase from 6% to 8% on all taxable services, except for F&B, telecommunication services, vehicle parking space services and logistic services.

“Earlier this month, the commercial and manufacturing sectors have already released a statement saying they are disappointed that their electricity tariffs have not been lowered after the drastic drop in fuel costs.

“Why do they need to be burdened again with an increase in the service tax rate?

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“After all, the expansion of the scope of service tax to many more sectors such as traditional medicine and complimentary services, logistics and delivery, brokerage and underwriting announced by the government will also increase the burden on businesses and consumers,” Dr Wee added.

Previously, it was reported that Dr Wee called for the government not to impose additional taxes for patients undergoing traditional and complementary medicine (T&CM) treatments.

He had appealed to the government to sympathise with patients who were seeking services such as physiotherapy and acupuncture.