In recent discussions regarding potential taxation on certain items, including gold jewelry, stakeholders in the industry have expressed their concerns about the impact such measures might have on individuals’ savings and the broader economy.
Datuk Dr. Anvar Hussein Rahumathullah, President of the Muslim Jewellers and Money Changers Association Penang, highlights that considering gold jewelry as a luxury item may not be appropriate, as many people view it as a form of investment and savings. He emphasizes that jewelry is not worn daily and points out that the increasing gold prices may create financial challenges for the public.
Anvar also speculates that the ongoing Palestinian crisis might further drive up gold prices, making it an even less suitable candidate for luxury taxation. He suggests that imposing such a tax could lead to a decline in revenue for goldsmiths, as buyers might seek gold in neighboring countries like Singapore and Thailand, thereby affecting the domestic economy.
Datuk Abdul Rasul Abdul Razak, President of the Malaysian Indian Goldsmith and Jewellers Association, adds that the proposed low tax threshold on gold could negatively impact local gold retailers. Small purchases, particularly by the B40 and M40 groups, constitute a significant portion of their business. Abdul suggests that taxing these small purchases could discourage people from investing in gold, potentially causing a significant decline in gold retailers’ business.
To address this, Abdul proposes setting a higher tax threshold for gold purchases, typically made for luxury purposes, at RM50,000 and above.
Mohamad Shaifudeen Mohamed Sirajudeen, the CEO of SMS Deen Jewellers, underscores the increasing importance of gold as a safe-haven investment amid global instability and high inflation. He points out that gold has become a favored option for financial security due to its liquidity during emergencies.
In Klang, S. Puspanathan, Managing Partner of Meenal Jewellers, suggests that instead of implementing a luxury goods tax ranging from 5% to 10%, the government could consider a goods and services tax starting at 3%. He argues that the higher tax rates would render gold jewelry unaffordable for many people, impacting both local communities and the tourism sector.
Goldsmith and director of S. Nadarajah Pather & Son Jewelry & Gems Sdn Bhd, S. Kughaan, expresses concerns about how the proposed luxury goods tax might affect the gold industry. He predicts a significant reduction in the number of customers, potentially up to 60%, which would be detrimental to businesses like his.
In conclusion, stakeholders in the gold jewelry industry believe that imposing a luxury goods tax on gold jewelry may have unintended consequences, affecting both individuals’ savings and the overall economy. The debate centers around whether gold jewelry is more appropriately considered an investment and savings instrument rather than a luxury item, and the potential implications of such a tax on businesses and consumers.
