GST - GOOD FOR THE RICH, BAD FOR THE POOR! PDF Print E-mail
Wednesday, 01 October 2014

 

PRESS STATEMENT 01/10/2014

Goods and Services Tax ( GST) :

 GOOD FOR THE RICH, BAD FOR THE POOR!

 

 

1 April 2015, GST will be implemented nationwide by the Federal Government. Currently, with all the hype, advertisements and statements by the Prime Minister, Ministers and government servants on GST we are made to believe that GST is the best taxation system and all of us rich and poor will be better off under the new tax. However it is not possible for something to benefit both the rich and poor. A gain for one is always at the expense of the other.

 

The government’s GST plan is an attempt by government to trick Malaysians into thinking that they will be better off after the proposed income tax and corporate tax cuts plus BRIM for the lower income people, despite the introduction of the Goods and Services Tax.


The government’s GST plan is an attempt by government to trick Malaysians into thinking that they will be better off after the proposed income tax and corporate tax cuts plus BRIM for the lower income people, despite the introduction of the Goods a

The heart of the tax package is the GST-everything else that comes with it is just to suck us in. The GST, levied at a rate of 6% , will replace the sales and service tax (SST). However, GST will cover a broader range of goods from basic necessities to; luxury goods whereas SST was only charged on luxury goods.

 

GST will only affect the consumers because the GST paid by business on raw materials, tools, electricity and rent is refunded. Business is exempt from paying the GST. The only GST payer is the consumer at the end, who pays a 6% GST on total price of the product. That is why big businesses are accepting GST.

 

Then there is the so-called compensation to suck us into accepting the GST. The income tax cuts, corporate tax cuts, bonus for civil servants and the BRIM is expected to be funded by the income from GST which they hope will create a budget surplus. If the budget is not in surplus next year, will the government cancel or reduce the tax cuts and BRIM ?

 

Furthermore income tax cut  only benefits 15 % of the population who are currently paying income tax whereas , the majority 85% who are not in the category to pay income tax ,  will have to pay a new tax , GST. This means , that a large proportion of workers who do not gain anything from the income tax cuts, will have to pay GST on every purchase they make, food, clothes, baby needs, funerals, telephone bill, electricity bill; nearly everything . Furthermore, the government claims that the BRIM payment of RM 450 –RM 650  will more than compensate for GST-induced price rises. Furthermore, the government claims that under GST, prices will increase only an average 1-2%.

 

However, given that people on low incomes spend the bulk of their income on essentials such as food, clothes, electricity and transport, it is clear that the more underprivileged such as senior citizens, students and people on welfare will be dramatically worse off.

 

Whereas, in what amounts to a "nudge-nudge, wink-wink" agreement between businesses and government, with the introduction of GST, businesses especially big businesses  can look forward to a reduction in corporate  tax.. These compromise which benefits business is done so that the implementation of GST can be done smoothly.

 

Isn’t it obvious that the rich and businesses are set to gain with GST whereas the poor will get poorer with a new tax which they have to pay for all the products and services they consume?

 

Of course, the other question here will be exemptions are there, so basic products wouldnot be charged GST and lower income people will not be affected.

 

Exemptions illusory

 

Well, items that might be exempted from the GST include health, education and child-care services, electricity, basic food products, water,public  transport and so on.  This exemption list or zero rated products list is still not being released by the government despite numerous promises since 2013. Furthermore, this list is not cast in stone, thus the list can change anytime and the tax exemption can be withdrawn any time by the government through a cabinet decision only.  Thus, one day we might be paying GST for food products and even health depending on the policy of the government.

 

Furthermore this exemption list is very illusory cause despite certain sectors might be exempted from GST, but, certain components of the sector will be affected by GST or price increase due to GST. For instance, health and education might be exempted because the government is promoting the private health and education systems while there is a significant drop in the quality of the public hospitals and schools as not enough funds are put in there.

 

While education is GST-exempt, this covers only tuition fees and accommodation at colleges and universities. Parents and students will still have to pay a GST on books, stationery, uniforms, computers, sports equipment, and food from school canteens.

 

The government also claims that “most health services will be GST-free" but admit that "the precise scope of the medical goods and services that will be GST-free is still being discussed. Even prescription medicines in pharmacies will be charged GST.  Sticking plaster, bandages, antiseptics, cough medicine, nasal spray and allergy drugs will attract a GST.

 

While hospital fees will be GST-free, other services within a hospital such as the charges for extra bed, certain services, use of telephone and the cost of newspapers and hospital food might have GST.

Financial services providers cannot charge a GST on most of their products and services. But because they are not entitled to input tax credits for any GST paid on their business purchases, they will pass on the cost as increased charges.

 

Local council rates, water and sewerage charges  might be GST-free, but other services provided by local councils, such as rubbish collection, recycling, recreation and cultural activities, building applications, licences and the use of municipal swimming pools and other sporting facilities and council cemeteries,  might be charged GST.

 

Thus, even if the government claims that certain items will be exempted from GST but the impact of GST will be felt as it is related to another sector that has GST or the GST charges are transferred to consumers in the form of price increases.

 

We from GabunganBantahCukai GST on behalf of Malaysians oppose the implementation of GST as it is a cruel tax which taxes the poor and low income earners whereas the rich and businesses get tax cuts and pay a lower tax with GST. If we allow the government to implement GST that is used to swindle the Malaysian people especially the 85% who are not falling inside the income tax bracket, it will be one of the biggest transfers of wealth from workers to government and employers in this country.

 

 

All Malaysians should reject the GST, the tax that makes the POOR POORER and the RICH RICHER

NO TO GST!

 

Statement released by  :Gabungan Bantah Cukai GST (Fb: bantahGST)

 

For more information  ;-Sivaranjani010-2402159

Last Updated ( Wednesday, 01 October 2014 )
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