Fomca okay with GST but wants safety net for poor

OCTOBER 30, 2013

Before implementing the goods and services tax (GST), Putrajaya should first create a safety net for the poor to protect them from the impact of the tax, said a consumer coalition.

The Federation of Malaysian Consumers Associations (Fomca) supports Putrajaya’s initiative to implement the GST in April 2015 but warns that precautionary steps are needed.

“This is to ensure the poor are protected from any detrimental impact that may affect their welfare,” said Fomca secretary-general Datuk Paul Selvaraj in a statement today.

He said a safety net can provide the poor with necessities such as food, housing, transport and health.

However, Selvaraj believes that the government should quickly explain the GST to the people to address their concerns.

“The government needs to provide explanations to every layer of society,” he said, proposing a “Shoppers Guide” be prepared and distributed to the masses to inform the public of the real impact of GST on prices of goods that are either zero-rated, exempted or taxed.

Selvaraj also said Putrajaya should act against traders who take advantage of the GST by hiking up prices to make additional profit.

Prime Minister Datuk Seri Najib Razak had announced last Friday that Budget 2014 would include subsidy rationalisation measures, such as implementing the GST and cutting off its sugar subsidy as part of efforts to reduce Malaysia’s fiscal deficit to 3.5% in 2014.

The abolition of the sugar subsidy of 34 sen per kg has raised concerns over the possibility of a sudden spike in food prices.

Fomca pointed out that an increase in the price of food and drinks would affect all, but especially those in the low-income group.

“It would have been best to rationalise the subsidy in stages instead of immediately abolishing it,” he added.

On a separate matter, Selvaraj said the number of houses to be built should be increased.

“By adding more houses in the market only then will the prices go down... Priority has to be given to first-time house buyers,” he said.

He also said while Fomca supports various government plans announced in the recent budget, “the government has to raise confidence in the rakyat that it is responsibly managing public finances through transparent and honest spending”.

“We support any steps taken to hold civil servants accountable for abusing public funds or to take responsibility for leakages,” he added. - October 30, 2013.