Tang Cheah Ying (Eva)
The
Goods and Services Tax (GST) implemented in Malaysia since April 1st has
already taken its toll on many Malaysian citizens especially those belonging to
the lower and middle income class. According to the research by MOHD RIZAL PALIL,
the consumers are worrying of the
significant price increases on basic needs when the GST has fully implemented.
With the relatively high living costs particularly in main big cities like
Kuala Lumpur, Penang and Johor Bahru, significant price increases due to GST is
considered as another burden for middle income earners.
What is GST? GST is the tax charged
by government for the taxable items and service, including all imported goods
and services. Besides that, the entire registered manufacturers are going to
assistance government to impose GST from consumers. Compared with the existing
business tax and service tax, GST is a broader concept, it will also charged
for production and service-oriented business line together at the same time. It
will make our country’s tax policy unification, and reform the government tax.
For Malaysia, GST is going to replace existing business tax and service tax
(SST). A lot of people are actually lack of cognition to GST. I’m also being
one of them. Therefore, the consumers worried about will the prices of all
service and products go higher? The low
income group of people will be more burdens. Our income is actually being bad,
so will GST let people life more badly? People might be changes their consume
habit because of GST; also indirectly affect the demand of the dealer
sales.
According to the research by MOHD RIZAL
PALIL, Goods and Services Tax (GST) was
in traduced in France in 1950s and has been adopted by more than 120 countries,
including all member states of the European Union (EU). Goods and Services Tax
(GST) is a percentage tax on value added (the difference between sales and the
cost of purchased material inputs) at each stage of production. There are three
basic types of value added taxes (VAT) depending on how the investment is
treated in the tax base, GDP-type GST, consumption-type GST, and income-type
GST.
References:
MOHD RIZAL PALIL, MOHD ADHA IBRAHIM. THE IMPACTS OF GOODS AND SERVICES TAX (GST)
ON MIDDLE INCOME EARNERS IN MALAYSIA. Pp16. Online available at: http://www.wbiconpro.com/213-Rizal.pdf [accessed
3May 2016]
June 9, 2015. Getting Over the GST in Malaysia. Online
available at: http://cmcf.org.my/getting-over-the-gst-in-malaysia/ [accessed
3May 2016]
Loo Yi Huan
I agree that GST is unfair to the middle class and
lower income groups, especially the poor families in Malaysia. The poorer
households will feel the effects of GST because there would be a higher
proportion of their income will be spent on GST.
According to the report of Malaysian Insider, it defined those Malaysian in the high-income
bracket would pay more on taxable items, however, they will hardly find the
pinch while middle-income or lower-income families would be able to cope. These
findings emerged from a survey of 12 families in Klang Valley to gauge the
impact of GST.
The survey has stated there are three families who
made RM5000 or lower were have to worry about the impact of GST on their
ability to make ends meet, despite the fact that they would not to pay that
much GST if they bought the same items. In addition, the survey has also
emerged there are most of the five families in the middle-income group with the
salary between RM5000 to RM12000 per month were also quite worried about but
they are still confident that they would be able to get it through.
On the other hand, based on the survey, it has
analyzed there are most of the higher income families would purchase the
processed food which have been taxed, such as chicken nuggets, potato chips,
branded chocolates, fruit juices or yogurts, biscuits and so on so forth. These
processed food are made up 40% to 48% of all food which purchased by the
high-income families.
Conversely, lower-income families are also purchase
processed food, but they only buy the processed food in lower price, and
probably lower quality but which would be taxed as well. Those processed food
may be instant noodles, soy sauce, butter, fruit jam, coffee and others. For
the low-income families, the process food is comprised 35% to 45% of all food
where compare to high-income groups, that is consider low.
Reference
FMT Reporters. (2015). Poor families have little to cheer about GST. [Online] available
at: www.freemalaysiatoday.com/category/nation/2015/03/18/poor-families-have-little-to-cheer-about-gst/
Goh Fang Yi
I agree that GST system is unfair to the middle class and lower
income groups.
The main issues concerning about the implementation of GST is the
costs of the goods will increase which will burden the people in the country.
Although the government claim that the implementation of GST will not hurt the
businesses and people as the tax paid on the inputs at the previous stage is
claimable or deductible, but overall the cost of goods will still increase as
the producers-pass the full value added to the end consumers at the final
stage. Consequently, there might have inflation effect since the GST is
applied to the prices of all goods, at every stages which result in inflation
as the general products prices may go up and the hyperinflation might occur
from the continuously of inflation.
Under the GST tax, all the goods and services will charges more 6%
on the products or services the consumers buy. It seems that 6% of the GST is
not too high or too low to the consumers with middle or lower income of
consumers in Malaysia, but when the things comes to the end of the month, the
6% of the tax that the consumers received is a large amount. For example, when
we buy a RM10 of prepaid card for telecommunication, there is another RM0.60
charges to the prepaid card u have bought. Let say u need to buy 4 times a
months for the prepaid card, it already an extra charges that costs u about
RM2.40. This is only one of the daily supplies need for a consumer, there are
many others of living goods and services that we will purchase in a month.
There might have continuously effect from the products prices go
up. The demand of the market might substantially decrease due to the limited
purchasing power of households. Many people argue against the GST is that the
people would not have the ability to pay for it as the high cost of living cannot
be met by their current income needs and GST would unduly burden the low income
working group.
References
Esther Ko, 2012. GST Malaysia Disadvantages(
Government, Business, Consumers). Available at: http://gstmalaysiaguide.blogspot.my/2014/12/gst-malaysia-disadvantages-government.html.
[Accessed 3 May 2016]
Ong Beng Fung
I agree that current tax system is unfair
to the middle class and lower income group. Because it is big impact to both of
this income level groups especially is the low income group. According to a
report, 45% of the undergraduates from institutions of higher learning were
offered a salary less than RM1500 after graduation. Compared to the national
average income of Malaysians, this group would be placed under the category of
the lower middle group. There are forty eight percent of Malaysian workers earn
less than RM1,000 per month. Thus the impact of GST on the low income earners
especially those who had no financial mean and depending on study loans or
family finance would incur a higher monthly expenditure. If low income earners
could not shoulder the financial burden, they would transfer the load to the
family. At present our national domestic debt had reached 87.1% of the national
gross domestic product (GDP). A big chunk of the family expenditure was
financing loans. Once they could not manage their financial debt, more and more
people would chose bankruptcy as the last resort. You can think that the costs
of the goods all is increased and their salary just only can afford their
living expenses. GST combined with inflation in Malaysia has created a burden
for the people of Malaysia who struggle to keep up with the rising cost of
utilities, groceries and petrol The low income group would not have the ability
to pay for it as the high cost of living cannot be met by their current income
needs and GST would unduly burden them. Besides that, according to “FMT news,
Joe Fernandez, 2015” the income inequality in Malaysia will also not be able to
tolerate the regressiveness of the GST system which burdens the poor
proportionately more than the rich,” reiterated Pua.
Kang Sing Yee
Kang Sing Yee
The current tax
system is unfair to the middle class and lower income groups. Yes! I totally
agree with that. The current tax system which is Good and Services Tax (GST)
and is a consumption tax imposed on the sale of goods and services. With the
relatively high living costs particularly in main big cities like Kuala Lumpur,
Penang and Johor Bahru, significant price increases due to GST is considered as
another burden for middle income earners and lower income earners as well.
After the implementation
of GST, the public will spend less in order to save their money. Let’s talk the
categories of restaurant involve with GST towards middle class and lower income
groups when they are having meal or dinner in a restaurant. Since the
government implement with the 6% GST charge and it
is too much and as a result, food prices at restaurants have increased. All
the food and drinks sold in a restaurant or to be eaten or drunk at the place
they are sold are taxable but also have some restaurant do not involve with GST
as well. GST is essentially a tax on consumption, and not production; hence,
the tax burden ultimately falls on the consumers.
In conclusion,
the implementing GST and to gain the benefits from the system established, the
Malaysian government shall look after all the effect of the tax system changes.
They shall consider from the bottom up of all the parties involved the
implementation of GST since it will involve not only the rich people, but also
the low and middle income earners who have been suffering with a high living
cost especially in the urban area.
Reference
Ramachandran, S.
(2016). What? Six per cent GST on food price and service charge too!.
[online] Theantdaily.com. Available at:
http://www.theantdaily.com/Main/What-Six-per-cent-GST-on-food-price-and-service-charge-too
[Accessed 3 May 2016].
Quora.com.
(2016). GST. [online] Available at:
https://www.quora.com/What-are-the-good-sides-and-the-bad-sides-of-GST-goods-and-services-tax
[Accessed 3 May 2016].
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