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Thursday, November 21, 2013

Towards a more effective taxation system with GST

by Adrian Lim, 
Posted on November 21, 2013, Thursday
INFORMATIVE: Noelle speaking to head of departments and various government
agencies during a briefing session held at the civic centre here yesterday. — Photo by Hiew Man Chien
KUCHING: The goods and services tax (GST) which will be implemented in April 1, 2015 is a more efficient and fairer taxation system than the current sales and services tax.

The new tax, will ensure that the government’s collection of revenue to be stablised without the influence of the external economic environment while creating opportunities to attract more foreign direct investments (FDIs) as the country moves towards a more-open trade environment.

In a briefing conducted by the Sarawak Customs Department in partnership with the Information Department of Sarawak, its senior assistant director of GST unit Noelle Lily Morse urged the public not to worry about the new GST as consumers will receive certain benefits and assistance from the government.

“Actually, GST is not a new tax but a replacement of the current sales and services tax.

“The sales and services tax which was introduced back then in 1972 and 1975 are considered obsolete, thus the government come up with a more effective tax system.

“The GST will not burden the people especially those in the low and middle income group as the government has put in place several measures to assist the ‘rakyat’.

“This include zero rate for most of the necessity items such as rice, sugar, subsidy in the form of fuel and cooking oil provided by the government and the 1Malaysia’s People Aid (BR1M).

“Certain quarters are not aware that some of the goods that they purchased for instance furniture, home appliances already has the element of 10 per cent sales tax being included in the price while certain services such as accommodation in a hotel and eating in restaurants have services tax of six per cent,” she said in a briefing to heads of government departments, agencies as well as community leaders here yesterday.

She pointed out that in some instances, consumers are charged with 16 per cent, which made up of sales and services tax when they purchase and use the services.

These taxes are hidden in the price of the final goods or services as some registered wholesalers which pay the tax are passing on the cost to the retailers while the retailers are charging them on customers.

With GST which will be implemented at six per cent, she explained that consumers can actually gain some four per cent in the form of sales tax from the current practice of 10 per cent for certain goods.

In addition, she added that the personal and the corporate taxes will also be reduced in anticipation of the implementation of the GST as the tax could cause an one off increase in prices of goods and services.

Meanwhile, she revealed that three months prior to the implementation of GST, the Customs Department will come up with a shoppers’ guide on the pricing of certain goods and service.

The move is to enable consumers to make comparison on the the prices of one retailer with the other as not to allow certain retailers to mark up their prices too high with the GST implementation.

In addition, she noted that officers from the Customs Department as well as from the Domestic Trade, Cooperatives and Consumerism Sarawak will also be doing ground checks on businesses for six months to one year after the GST is implemented to ensure that businesses are not overcharging the consumers.

Over the long run, she believes that prices of goods and services will adjust itself to be more stabilise and reasonable.

She urged consumers to lodge complaints with the Customs Department and officers from the Domestic Trade, Cooperatives and Consumerism Sarawak if they found out businesses and service providers which are charging excessively for the goods and services that they supply.

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