MANY people are worried and confused regarding the Goods and Services Tax (GST) due to various reasons such as misinformation, lack of understanding and speculation. However, the Government has been taking steps to rectify this and there is still plenty of time since GST will only be implemented in April 2015. One of the main concerns is that the GST will raise prices of all goods and services but this is not quite true as consumers are already paying the Sales and Service Tax (SST).
The GST will replace the SST, not overlap it, and in some cases, this will cause prices to fall.
This is because flaws in the SST often cause issues such as taxes levied on top of taxes or companies including tax in their price but not passing them on to the Government.
Basically, the SST is a high tax on few products with many loopholes while the GST is a lower tax more products and promotes transparency. Due to provisions in the GST, thrifty consumers will actually pay less tax than they do now and those who are spendthrift may not even notice the negligible increase in the prices they pay.
Additionally, to ensure that sellers do not attempt to take advantage of the unaware by raising prices, the Government will step-up enforcement of the Price Control and Anti-Profiteering Act 2011 and harsher punishments have been promised to those who contravene it. The GST also makes provisions which will lower taxes on exports, which should attract foreign investors to produce their goods here and sell them overseas.
For those concerned that the GST will cause inflation, it should be noted that previously, Fitch Ratings predicted that Malaysia’s credit rating might be downgraded in their June forecast.
According to economists, this would have caused inflation as the Ringgit would be devalued and in turn, cause imports to be more expensive.
The GST is part of a multi-step plan, which includes lowering subsidies which benefit those who don’t need them, to counter these concerns.
Hopefully, this brief and simplistic explanation of the GST will help clarify matters but for those interested in finding out more, details from official sources are already available with more coming out every day.
Deputy Director BNYV
* Ini adalah pendapat peribadi penulis dan tidak semestinya mewakili pandangan BNYV