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Friday, November 1, 2013

‘Lesser end products GST but supply chain taxed’

| October 27, 2013

If the argument that the rakyat will pay less under the GST compared to SST is true then why introduce GST as a revenue raising measure?

KUALA LUMPUR: Serdang MP Ong Kian Ming disclosed today that the the number of items which are zero rated under the Goods and Services tax (GST) and not taxed at any point of the supply chain is only 21 pages long as compared to items on the Sales Tax.

He said according to the Sales Tax (Rates of Tax No.2) 2012, the number of items which are exempt under the Sales Tax and not taxed ran into 250 pages.

He said the government’s trying to mislead Malaysians by giving the impression that the prices of most goods and the taxes paid by the consumer will be reduced after the GST.

He pointed out that the GST catch was in the supply chain.

He said the wider coverage under the GST also meant that more services will be charged the levy compared to the current service tax.

“What the BN has not told the rakyat is that many items are currently exempt under the sales tax.

“The truth is that the items taxed under the Sales Tax and the Service Tax (SST) is far less than what is taxed under the GST,” he said.

Ong said some of the zero rated items which are not charged under the sales tax but will be levied under the GST include many non-luxury items such as milk, coffee, tea, mineral water, canned fruit, newspapers, stationary, school bags, and boxes.

“This means that the prices of the majority of goods and services will increase because of the GST even after the removal of the SST.

“It is (also) possible that services such as those provided by certain tuition centers and hair saloons will be charged the GST,” he said.

‘Empty lie’

Ong further added that the BN had also included residential properties, financial services, healthcare and transportation as items to be tax exempt (as opposed to zero rated) under the GST.

He said this meant that while the end product sold is not taxed by the GST but the inputs used to produce these goods and services will still be slapped with the 6% tax.

“For example, residential properties won’t be taxed by the GST but the construction materials used in the building of these residential properties will be covered by the GST.

“What this means is that the prices of the goods and services which are tax exempt will also likely rise as a result of the GST.

“Ultimately, the argument that the raykat will be paying less tax under the GST compared to the SST is an empty lie.

“If this was the case, then why introduce the GST as a revenue raising measure in the first place?,” he said.

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