Switch to SST will hit elderly hardest, says research body

Azrul Mohd Khalib of the Galen Centre says social security safety nets, welfare systems and pension funds will be significantly stretched and overtaxed. (Bernama pic)

PETALING JAYA: A health policy research body has warned of a “demographic crisis” unless the government overcomes the reduced revenue after the switch to the sales and services tax (SST).

The Galen Centre for Health and Social Policy said less revenue might force the government to adopt austerity measures and cut back on spending on social support infrastructures.

This might result in the elderly population becoming even more vulnerable with fewer government-funded programmes, said Galen Centre chief executive Azrul Mohd Khalib in a statement today

“Already deemed as a country which is ill-prepared to deal with an ageing population, this development puts the ageing population at risk.

“Combined with the possibility of reduced or even withdrawal of funding for long-term care and support, it represents a demographic crisis in the making,” he said.

The SST is scheduled to come into effect on Sept 1, in place of the goods and services tax (GST) which will be abolished.

Revenue figures quoted by the government suggested SST collection might only amount to about half that of the GST.

Azrul Mohd Khalib.

Azrul said that by 2030, an estimated 15% of the Malaysian population would be classified as senior citizens above the age of 60.

Most would have reached retirement age and stopped working.

Azrul said social security safety nets, welfare systems and pension funds would be significantly stretched and overtaxed.

“These demands will only grow greater as the years go by. We seem to not have a long-term sustainable plan on how we are going to fund them,” he said.

He listed several challenges of caring for the ageing population in Malaysia, which must involve:

  • Development of financing and insurance systems for long-term care better than the ones currently in use,
  • Harnessing developments in medicine and healthcare services to keep senior citizens healthy and active for as long as possible,
  • Changing the organisation of community services to ensure that care is more accessible and affordable, and
  • Challenging stereotypes and prejudices where the younger generation see senior citizens as more of a burden to society rather than a contributing member.