Wee: Review plan to raise service tax on power and water bills

       PETALING JAYA: The government should reconsider its plan to increase the service tax from 6% to 8% on power and water bills to help ease the financial strain on households and businesses, says Datuk Seri Dr Wee Ka Siong (pic).

       The MCA president pointed out that consumers were already feeling the impact of an estimated 40% surge in electricity bills due to the increase in Imbalance Cost Pass-Through (ICPT) rates for businesses last year from the hike in coal and gas prices.

       “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.

       The 8% sales or service tax, which was announced in Budget 2024, is expected to start in March. However, the additional 2% rate increase does not apply to food and beverages, telecommunication services, and several other essential services.

       In a statement yesterday, Dr Wee asked:

       “Telecommunication is a basic monthly utility. The same goes for electricity and water. Why is the service tax rate not maintained for electricity and water charges as well?”

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       He said that he had spoken many times in Parliament early last year about the increase of about 40% in electricity bills as a result of the increase in ICPT rates.

       Dr Wee said despite the reduction in the prices of coal and gas, the ICPT rates had remained the same.

       He also pointed out the irony of the government wanting to increase the service tax despite the fact that “the value of service tax collection on electricity has increased since last year”.

       “People’s lives are really difficult now. Would the government exempt the increase of service tax on electricity cost?” he asked.

       He noted that there had been a “drastic reduction” in the cost of fuel such as coal and gas, as well as the abolition of rebates and additional surcharges imposed on both the commercial and domestic sectors, which have increased monthly electricity bills since then.

       The government’s subsidy burden is expected to drop to RM1.9bil for first half of this year, he added.

       “Earlier this month, the commercial and manufacturing sectors have 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?” he asked.

       Dr Wee recently urged the government not to impose additional taxes for patients undergoing traditional and complementary medicine treatments.