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Thursday, January 2, 2014

Ahmad Maslan ridiculed for saying GST will lower prices

DECEMBER 23, 2013

Malaysia is to implement a goods and services tax in 2015, a move which
is likely to hit ordinary Malaysians the most. – The Malaysian Insider file pic, December 23, 2013.
Pakatan Rakyat (PR) leaders took a swipe at Datuk Ahmad Maslan over the deputy finance minister's remark that the goods and services tax (GST) will cut prices of necessities and not vice versa as claimed by the opposition.

DAP publicity secretary Tony Pua shot back at Ahmad and told the Pontian MP "to go back to Maths school to polish up his arithmetic skills", adding that he failed to infuse any logic in his statement yesterday on the impending GST.

"For making such a claim that prices will fall after GST is implemented reflect the quality we have as a deputy finance minister," Pua said in Kuala Lumpur.

Pua noted that the GST would replace the sales tax and services tax.

"However that does not mean that the amount of taxes paid by Malaysians will fall because two forms of taxes are being replaced by one as claimed by the deputy minister."

He said while the sales tax today was at 10%, it was implemented at the manufacturers’ end and to a limited number of products.

"GST, on the other hand, is imposed on every single product, barring a few exceptions. What's more, 10% collected from the manufacturers may not be more than the 6% from the retailers," he added.

Citing an example, Pua said a manufacturer may sell a product to a distributor for RM100 and pay 10% or RM10 as sales tax and the distributor then sells it to the retailer for RM150, who then sells it to the consumer for RM200.

"Once GST is imposed, 6% will be collected from the final retail price of RM200, or RM12.

“RM12 is clearly more than RM10, even though GST is only 6% as opposed to the 10% sales tax."

Pua said obviously, the Government would collect much more from the GST compared with the current sales and services tax (SST).

"In 2012, SST provided RM15.9billion in revenue. The Finance Ministry estimated that in 2016, Putrajaya could collect an estimated RM33 billion once the GST was fully implemented.

"If prices do not go up, if the rakyat does not pay more as a result of GST, how is it that the Government can collect more taxes from the rakyat?" the Petaling Jaya Utara MP asked.

PKR strategy director Rafizi Ramli also expressed shock over Ahmad's GST stand, adding that the latter failed to view the practicality of its implementation.

He said Ahmad was justifying the GST on the basis that manufacturers could claim tax credit and they would voluntarily reduce price.

"This is a fairy tale. What they (the Government) are missing is that manufacturers are now are exposed to a variety of increased cost because there are more services and goods used in their manufacturing activities which are now subjected to tax.

“This has a two-fold impact on their costs.

"It's not charity but a business and the decision to lower price is not by law," the Pandan MP added.

Rafizi said that if PR had considered GST from an entirely political perspective, the opposition pact would have allowed BN to implement it much earlier.

"Why so? Well, the implementation will surely rile up Malaysians so much that it will be beneficial politically to PR."

However, he said this would be at the expense of the rakyat.

He said the implementation of the GST in other parts of the world saw an increase in cost of doing business and inflation.

Rafizi said Ahmad should first study and look into the experience of GST in other countries.

PAS Women chief Siti Zailah Mohd Yusoff asked Ahmad to ponder on how the impending electricity tariff hike, coupled with the anticipated toll hike, had caused an uproar before making his remark on the GST.

"He must first think. If we are to see other countries which had implemented the GST, prices has skyrocketed. The GST will cause prices to surge and 6% is too high when income levels remain stagnant," said the Rantau Panjang MP.

Ahmad said yesterday that the opposition will "fail miserably and be left in despair" for spreading lies over the introduction of the goods and services tax (GST) in 2015.

According to the Pontian MP, the Government was merely trying to cut costs with the GST while the opposition kept rejecting the initiative.

"Why don’t they (Pakatan Rakyat) want GST? Because when prices of goods and services fall, the opposition will not have any fodder to hit out at the Government.”

He was responding to a report featured in the The Malaysian Insider yesterday highlighting an anti-GST campaign spearheaded by PR and several non- governmental organisations.

One of the campaign objectives is to counter Putrajaya's ongoing media blitz to promote the GST. – December 23, 2013.

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