IT IS A FALLACY TO BLAME GST FOR ANY RISE IN PRICE OF GOODS & SERVICES

Parliament of Malaysia has deliberated extensively ,taking into consideration   the current  income level of Malaysians, and has agreed to implement Goods & Services Tax (GST) in Malaysia effective from 1 April 2015. This approval is in line with Articles 96 & 97 of the Malaysian Constitution. The  Government has also announced that the SST or Sales and Service Tax currently in use  will be replaced by  Goods & Services Tax (GST) . With this, the Sales and Service Tax (SST) will be abolished and GST at 6 % will be implemented in Malaysia.

 The Malaysian Government  is taking a lot of efforts and  initiatives to  inform and explain to the public, including the business community , about  the advantages of GST to people, national economy and the implementation process. But there are some people out there, those who are align to the opposition   political parties, confusing the general public , particularly the lower income group, that if GST is implemented, it  would burden Malaysians to pay additional  taxes to  government. 

We feel disheartened that there are some   irresponsible groups confusing the general public on the understanding of GST. These irresponsible group are confusing the  vast majority of the  lower income group, particularly  those who do not  fall under the non- paying  income tax  group,  will be affected by having to pay GST. They confuse the public that at the moment they are  not paying any tax to government but when GST  implemented, they have to pay tax for all the goods and the services they buy.  They claimed that when GST is implemented, the price of goods will   rise  and that the poor from the low-income group will bear the burden.

At the moment public in Malaysia   are paying 10-20 % tax for goods and 6 % tax for services under the Sales & Services Tax system (SST). .  The consumers in Malaysia are paying   tax under SST for the goods and services since year 1975 without realizing that they are paying tax. The consumers  did not realize or aware that they  are paying tax because  the  tax for the goods and services they buy are  included in the price of the goods and services they  buy  by the manufacture, supplier, retail traders at various stages of consumer chain. There is  also a tendency of double tax in the SST system where the consumers are burden to pay at every level of consumption.

Under the GST system, about 89 % of the essential goods and services, particularly the goods and services that public consume daily , such as rice, cooking oil, sugar, meat, various kinds of fish, dry fish, vegetables of various kinds, are exempted from tax. Even public transportation and educational services are exempted from GST.  The consumers will only need to pay 6 %  tax  for the  goods and services which are considered  non - essential  in nature. These non essential goods  are  not included in the GST exempted goods and services list. With this, the price of goods are expected to be cheaper when GST implemented next year (2015).

Currently, the Gross National Income (GNI) of Malaysia  stands at RM 34,126 (2013) and  the household income per month  hits at  RM5,000. With this GNI  and House Hold Income , Malaysians  are expected not to  consider GST at  6 % rate as a burden to them. After all  currently they are already paying about  6% -20% tax for the goods and services under the SST system.  There are many countries whose GNI and House Hold Income very much lower  than Malaysia  paying GST at 12-25 % . At the moment, there are more than 160 countries have already implemented GST. This clearly demonstrates that GST is proven to be a transparent, effective and fair tax system. The vast majority of nations in the world would not have implemented GST, if it is disadvantageous to their people and their country.

Malaysian must be aware that price of goods and services are usually determined d by factors such as  cost of production and the demand and supply. If there is more demand  for a product, then that product will fetch a higher  price and if less demand, the price of that product will be sold at a lower price. Hence,   it a fallacy to blame or claim  GST  for any  rise  in price of  goods and services  sold in the open market.