Prime Minister Datuk Seri Najib Razak made the announcement during the tabling of Budget 2015 in Parliament today, saying the move was aimed at helping the lower income group cope with inflation.
Basic food items like bread, noodles, coffee, tea as well as important medicines will also be exempted from the new tax system, he added.
These include 2,900 medicine brands used to treat 30 types of diseases, including heart failure, diabetes, hypertension, as well as for fertility treatments.
Reading materials such as children’s colouring books, exercise and reference books, textbooks, dictionaries and religious books, and newspapers will also be exempted from the GST, Najib announced.
Putrajaya has also agreed that electricity consumption that is not subject to the GST will be increased from the first 200 units to 300 units.
“This will benefit 70 per cent of households,” Najib told the House.
Of the 944 goods and services listed in Malaysia’s Consumer Price Index (CPI) basket, the prices of 532 items or 56 per cent are expected to reduce by 4.1 per cent, the prime minister said.
These items include goods like medicines, electrical appliances such as refrigerators and washing machines, textile products, plastic products such as pails and plates, shoes and slippers, household furniture, baby diapers, soap, meat, chicken eggs, cooking oil, seafood, rice and vegetables.
About 354 goods and services may experience some price increase, Najib added but gave his assurance that the increase would be less than 5.8 per cent.
“The Government hopes that traders will be responsible and not raise prices indiscriminately to burden the rakyat,” he said.
A shopper’s guide will also be released for customers after the implementation of the GST, Najib added.
Malaysians have recently voiced opposition to the implementation of the new consumption tax system, following concern that the move would shoot prices up.
Many were also worried that the GST would push fuel prices up.
Just two weeks ago, the government sparked public anger when it slashed fuel subsidy and increased the prices of the RON95 petrol and diesel by 20 sen per litre.
Putrajaya, however, claimed consumers will only feel the pinch of GST after the first year of its roll-out.
