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Monday, April 14, 2014

Serious GST impact: Lawmakers

Daily Express

Published on: Monday, April 14, 2014 

Kota Kinabalu: Lawmakers from both the ruling coalition and the opposition in Sabah believe the Goods and Services Tax (GST) will greatly affect the people, particularly those in the lower income bracket, once it is implemented in April next year.

Sepanggar Member of Parliament Datuk Jumat Idris said even economists were divided in opinions, with some saying it would burden the people and others saying the burden would only be temporary.

However, Jumat believed that the anticipated drastic increase in prices despite having many goods exempted from the GST, when it is implemented, would be a big slap to the people.

"Once subsidy has been taken off, definitely the price of goods will increase and in the end the extra cost due to taxation on the traders will be passed on to the people who are customers," he said.

Jumat, who is also Sepanggar Barisan Nasional (BN) Chairman, said for instance, with the implementation of the GST, smallholders earning about RM500,000 a year are required to open a GST account with the bank.

"They need to pay the six per cent GST for the fertilisers and other agriculture equipment," he said.

Commenting on the Goods and Services Tax Act which was passed in the Parliament recently, Jumat said low-income workers in the private and public sectors in his sub-urban constituency would be badly hit.

"Everything they would need to pay such as house rent, car loan, Internet service, children schooling, family expenses, etc. Those earning RM3,000 a month are already finding it hard to maintain their savings, what more for those who are earning RM1,000 and below?" he asked.

According to Jumat, about 68 per cent of his constituents are earning RM1,000 and below.

"Before they could get a mixed vegetables rice at RM3.50 for lunch, but nowadays they have to fork out RM5," he said, adding that traders were increasing prices to cover the rising cost.

Jumat said in his debate on the GST Act in the Parliament, he proposed that the Government assist people by providing macro business facilities, build more stalls and business premises, while the GLCs buy commercial premises to be rented out to the low-income people.

"The Government is giving BR1M to those eligible once a year, aimed at returning the subsidy to the poor people, but the target is not right and its effect is only temporary," he said.

Towards this end, Jumat said a Bumiputera commercial centre should be established in Sepanggar to provide a place for the low-income people to venture into business.

He also proposed that a State GLC, Permodalan Bumiputera Sabah, be put in charge of a special fund to provide business loans to the local traders and hawkers.

"The Terengganu government is providing RM300 million for Tekun to manage for the exclusive use of Terengganu's people. Similarly in Melaka, so it's time for Sabah to do the same as we have GLCs like Sawit Kinabalu and several others that can contribute to the fund," he said.

Jumat believed that the State Government led by Datuk Seri Musa Aman, a former corporate man, is able to increase the number of successful Bumiputera businessmen.

"I also hope that weaknesses in the delivery system will be rectified so that the people will continue to have confidence in the Government.

If the BN government failed to address half of these issues, I am worried my own supporters will run to the opposition and in the end, we all will become opposition," he said.

For Sabah DAP Chairman cum MP for Kota Kinabalu, Jimmy Wong, he believed income inequality would worsen after the implementation of the GST.

DAP Sabah is worried that the implementation of the GST in 2015 would further widen the income gap in the country since the new taxation system would greatly affect the lower income group earning less than RM2,000 or RM3,000 per month.

The recently passed GST Bill had been accused of a policy which "takes the money from the poor", he said, adding that the proportion of GST payment to the lower-income group's income was actually bigger than the higher-income group's.

"If one earns RM2000 per month and he/she spent RM1,500 for goods and services, then he/she will need to pay RM90 for GST, which is almost five per cent of his/her income," he said.

"If this calculation is applicable, it means the impact of GST to one's income ability is bigger for the lower income group compared to the higher income group," he said.

Wong opined that the GST is a regressive tax which is unjust to the society.

Stating that Malaysia is not ready for the GST, Wong also suggested that the GST, if implemented, should be chargeable only for luxury goods and not the basic goods.

"What for we charge GST on petrol, electricity, telco, car, housing and land which are all basic goods? Can you imagine that the implication of the GST will definitely cause chain reaction on price hike for everything?" he asked.

Wong hoped the Government would look into the issue from the perspective of the lower incomes group and reconsider its implementation.

Sandakan MP Stephen Wong pointed out that the present national household debt is 83 per cent compared to the Gross Domestic Product (GDP), meaning the GST is an additional burden that hurts the low-income group.

Based on his visits to several villages in the interior of Sabah, he found most of the household income there to be around RM500 to RM800.

Stephen said the GST would have great implication on Sabahans if implemented, in view of the lower income and high cost of living in Sabah compared to Peninsular Malaysia.

"This means poor people in Sabah are paying a higher GST!

This is a double injury to the people of Sabah," he said.

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