Monday, October 14, 2013

Why fret over GST?


As far as I am concerned, with the GE13 over, and the two top posts in Umno went unchallenged, the introduction of GST is a given, come this Budget Day.

Despite numerous articles on the proposed GST, a retired teacher told us at breakfast: 'I read Dr. Fong Chan Onn's article, but still cannot understand.' I can understand why. Normally, someone with a Ph D tends to be verbose and lengthy in their explanation, except, Dr Zahid, who is best at swift solutions like 'shoot first', based on racial prejudice and 'criminal look'. I wonder how he defended his Ph D thesis 5 years ago.

Anyway, I do not understand why the retiree bother to try and understand the workings of GST, when as a consumer, he could just get used to the new prices after implementation, just like before, whenever there was a change for one reason or other.

As a consumer, he does not need to register for GST nor need to account for it. Just pay whatever is charged. He does not need to know whether the shop is properly registered nor whether they account for the tax properly.

Whether we have been overcharged, with or without a reason, the best solution is just to boycott the shop or stall. There is no use in arguing nor being right, backed with facts and figures.

I have tried before: trying to explain certain things, but would give up when I got interrupted or I noticed the listener losing interest or attention. The same retiree's standard joke when approached by someone who tried to introduce some investment plans: I'm interested in months, preferably days... don't tell me anything which is more than a year as I don't think I can live beyond that!

In my opinion, sooner or later, GST will be implemented because of it being a convenient source of revenue and the ease the rate can be adjusted. Even with strong opposition from the opposition and the public, soon the oil will dry up or our extravagant expenditures will see to its introduction to make ends meet.

For a more straightforward explanation of GST...

For an overly simplified example of GST (like using 10% rate)...


Business:                         A B C       Total
Selling price before GST 1.00 1.20 1.50
Value added                          0.20 0.30      0.50

SP after GST @ 10% 1.10 1.32 1.65
GST payable to Govt 0.10 0.02 0.03     0.15


Note:
The GST comprises (0.10 + 0.02 + 0.03) which totalled 0.15 or 10% of final selling price 1.50.
Business A is presumed to have no input GST and therefore pays Govt 0.10 charged to B;
Business B pays net GST (output tax 0.12 charged to C, less input tax 0.10 paid to A) = 0.02.
Business C pays net GST (output tax 0.15 charged to consumer less input tax 0.12 paid to B) = 0.03.

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