Published: Friday October 25, 2013 MYT 7:05:00 PM
Updated: Friday October 25, 2013 MYT 8:25:27 PM
BY TAN YI LIANG
PETALING JAYA: Consumer groups have come out in support of the 6% goods and services tax (GST) announcement by Prime Minister Datuk Seri Najib Tun Razak during his Budget 2014 speech on Friday.
Najib said that GST, which will be introduced from April 1, 2015, would not affect consumers if profiteering was kept in check.
Federation of Malaysian Consumers Association (Fomca) secretary-general Datuk Paul Selvaraj said that the Government had to use existing legislation to ensure nobody would profit from GST.
"The Government must use the Price Control and Anti-Profiteering Act to ensure that no business takes advantage of GST. Any price increase must be related only to the GST," he said.
Selvaraj told The Star Online that Fomca would support the GST provided that proper anti-profiteering mechanisms and education for consumers were put in place, as it would not affect consumers drastically.
"There won't be an inflationary effect, and some items will be unaffected as they are zero-rated. The impact will be on standard items.
"It is not a new tax but a replacement tax. The Government has said they will publish a shoppers guide which will show the impact of the GST on major items," said Selvaraj.
He added such a guide would show the impact of the GST on the public.
"It will tell us the impact of the GST on specific items and whether any businesses are marking up their prices beyond that," said Selvaraj.
Similarly, Islamic Consumer Association of Malaysia (PPIM) chief activist Datuk Nadzim Johan Johar said he did not feel GST would not affect consumers much as long as business establishments did not take advantage of consumers' ignorance.
"If everybody is ethical about the whole thing, consumers will not be affected, because the price difference is so small when compared to the older sales and services tax. After a while prices will adjust themselves," said Nadzim.
He added that the introduction of GST would ensure that no one could avoid paying some form of tax.
"Many illegal immigrants are not paying taxes, and less than two million Malaysians paying tax.
"With GST, even illegal immigrants will be paying a form of tax, it is a general tax for everybody and the government can benefit from a steady source of income," said Nadzim.
He said however that PPIM had its own concerns, saying that the revenue earned through the GST had to be spent wisely.
Meanwhile, Parti Sosialis Malaysia secretary-general S. Arutchelvan denounced the planned introduction of the GST.
"I think it is a terrible announcement, because the income disparity in Malaysia is the second highest in Asia.
"The whole budget is tailored to reduce corporate tax and income tax, and it is shifting the tax burden from high-income earners to the entire population and this is unfair," said Arutchelvan.
He said a GST would be more meaningful if the government had implemented a minimum wage of RM1,500 as opposed to the RM900 currently.
He also said a 6% GST would cause problems for a lot of people as even zero-rated items such as rice could see price hikes when GST kicked in.
"It will have to be packaged in plastic and transported in lorries - these will be affected by GST costs, which will be added to the cost of the rice," said Arutchelvan.He added that companies with the resources to hire consultants would exploit all possible loopholes to get out of paying GST, unlike the man on the street who would have no choice but to pay the tax.