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Friday, May 9, 2014

Still doubts over GST

Opinion 2014-05-07 14:54
Translated by SOONG PHUI JEE
Sin Chew Daily

After the anti-GST rally on May Day, Deputy Finance Minister Datuk Mazlan Ahmad said that the rally was inappropriate as the government will still be imposing the GST on April 1, next year. Meanwhile, Prime Minister and Finance Minister Datuk Seri Najib Razak said that the government is looking at the items and products that could be exempted without affecting the revenue base expansion.

From here, we can see that the implementation of GST is inevitable and the people can only hope for more GST-exempt items.

Currently, items that have been confirmed to be GST-free are mainly daily necessities, such as rice, livestock, fish, meat, vegetables, sugar, flour and cooking oil. In addition, residential and agricultural assets, health services, education and public transportation are also exempted.

The government has repeatedly stated that the GST is not an exaction. Instead, the implementation of GST could increase government revenues, strengthen the country's competitiveness, improve the country's infrastructure, contribute to national economic growth and benefit the people. The introduction of GST is an important part of the government's tax reform and it is meant to replace the current Sales and Service Tax 1975 (SST), to solve the problem of double taxation. Under the GST, consumers will enjoy fair prices in majority of goods and services. As for businesses, since they can reclaim the GST, it could help reduce the cost.

The government has also revealed that 160 among the total 193 countries in the world have implemented the GST, including 28 poor countries, 41 lower middle income countries, 39 higher middle income countries, 42 high income countries and 10 other countries. Take Asean for instance, only Brunei, Myanmar and Malaysia have not implemented the GST. Singapore, Thailand, Indonesia, the Philippines, Cambodia, Vietnam and Laos have implemented the tax at a rate of between 7% to 12%. The GST in Malaysia will be implemented at a fixed rate of 6%.

For the masses, economic data are too complicated and might not necessarily reflect the actual situation. Over all these days, following utilities tariff hikes and various measures to cut government subsidies, many prices have surged. The people, particularly those at the bottom, have been suffering the wave of price hikes that seems to have lost control. The anti-GST rally claimed that the GST is a tax system that robs the poor to save the rich and it has actually pointed out the doubts of many. Therefore, the people are now most concerned about whether inflation will be worsened after the implementation of GST, causing life to become more bitter.

According to the Deputy Finance Minister, the GST will be imposed on 689 goods in which 73 items will experience price hike, 287 items will see a price drop and price of 329 items will remain the same. It seems like there will be more items experiencing price drop than those having price hike. However, we must not forget that 255 other goods are still being reviewed and thus, the actual situation might change.

The government is expected to issue a shoppers guide containing 1,000 types of goods in January 1. However, it is unsure whether it can help in avoiding traders from arbitrarily raise prices, as the Deputy Finance Minister claimed. Everyone knows that it has been the market's rule that as long as there are demands, no measure can actually stop high prices completely.

In any case, practice is the sole criterion to test the truth. Whether the GST is good or bad, the people will be the one to make the judgement.

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