Middle-income households' education savings will be hit hard by SSPN tax relief removal, Syed Saddiq warns
KUALA LUMPUR, March 28 — The Inland Revenue Board's (LHDN) decision to end tax relief for National Education Savings Scheme (SSPN) depositors will pose a huge financial impact on the middle-income families, Muar MP Syed Saddiq Abdul Rahman said today.
The Malaysia United Democratic Alliance (Muda) president said that without the tax relief, parents from the income group will have less incentive to kickstart an education fund for their children.
"The SSPN savings are not meant for buying luxurious items or property, but meant for the education of our children. Just look at the year 2021, 45,000 students became dropouts, last year there were 390,000 youths who didn’t want to further their studies after completing their SPM.
"We also see studies showing that two out of three youths have no interest to further their studies after they have completed their SPM. These data show that we need to offer unique incentives in order for the youths to further studies at the university level,” Syed Saddiq told reporters at the Parliament building here.
He stressed that if the government does not review or reconsider this decision, the number of dropouts will become worse.
Syed Saddiq added that the tax relief amount of RM8,000 is not a small number, and if it is carved out per year for seven years for example, it is a huge amount.
"That’s more than RM50,000. If we look at middle-class households, at least they will carve out five years before their child enters university, and that is about RM40,000 which that can spend for their child’s education,” he said.
Syed Saddiq said this is an issue that is very close to him as he had helped underprivileged families in Muar to set up their SSPN savings.
"I started this initiative early last year when I had many families come to me for help to send their children to university. But when they came to me, their request was for big amount of monetary aid, which I could not provide for.
"So that’s why I decided to help them start the SSPN savings by contributing RM500 to each family. To date there is RM322,000 worth of funds allocated for 400 students,” he said.
The students were aged seven to eight when the SSPN accounts were set up, Syed Saddiq said.
In a statement issued yesterday to confirm the tax relief removal, Deputy Finance Minister Steven Sim said the government will not extend the tax relief due to the additional tax relief that was made available such as the 2 per cent reduction on individual income tax, medical expenses tax relief which was increased from RM8,000 to RM10,000.