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.