The GST: Rushing to buy things
Rasa Writes
My neighbour, a pensioner, is very worried about the impact of the Goods and Services Tax (GST).
He says, “As it is the value of the Malaysian ringgit is dropping and the price of oil in the international market is down, leading to talk that the Malaysian economy will see bad times next year.
“I don’t know how I will cope. Added to that is the uncertainty of the GST. Some people tell me that the prices of many things will go up and that we will all end up paying much more than we are doing now.”
I must admit that although I have read some stuff about the GST, and listened to Prime Minister Datuk Seri Najib Razak when he presented his Budget, I still have some doubts about whether it will be good for me and consumers like me.
The GST is taking effect on April 1 next year, with a six percent tax across the board.
My neighbour says he plans to buy several more expensive electrical items that he needs by then.
“My fridge is old and I know I will have to replace it sooner or later so I plan to buy one before April 1. My wife also wants me to get a new high-definition TV set,” he says.
I told him not to panic over this and start buying things. It could be that some of these items might be cheaper after April 1. I said I had read that cars, for instance, would be or should be cheaper after April 1.
There are reports that some traders have placed “pre-GST sales” banners to attract customers, adding to the fear of higher prices post-GST. It is, therefore, a good move on the part of the government to ban the use of such banners or taglines to promote sales.
Another neighbour, who changed his car last month in an effort to beat the GST, is probably going to regret not waiting until after April 1, 2015.
One friend just spent more than RM2,000 on furniture.
The government says it is taking measures to ensure the poor will not be adversely affected by the new taxation system that replaces the Sales and Services Tax.
That is very important as there are still poor people in Malaysia and I hear reports about an increase in the number of homeless people, especially in and around Kuala Lumpur.
The government says the GST is a better taxation system and that it needs the money to carry out programmes and projects for the people, such as infrastructure development.
The GST is said to eliminate double taxation, and that when the current Sales and Services Tax, which amounts to 10 percent, goes, there will, theoretically, be fairer prices in the market.
The question of course is whether this will happen.
The government says the prices of 56 percent, or 532 items in the basket of goods of the Consumer Price Index will drop by up to 4.1 percent. If so, that is good news.
The list of 532 includes such items as electrical appliances such as refrigerators, which my neighbour wants to buy, textile products, household furniture, shoes, cooking oil, rice and vegetables.
However, it is certain that prices of some or many goods and services will also go up. The government estimates that 354 goods and services might see an increase in price.
To make it bearable, the government is exempting certain areas or items from GST and this includes travel by rail, ship, boat, ferry, and bus including school bus and workers bus.
Also, there will be no GST on the use of toll highways and there will be no GST on the rental or sale of residential properties.
Also such daily items as coffee powder, tea dust and cocoa powder are GST zero-rated. So too are items such as vegetables, sugar, flour, livestock, fresh and frozen meat, live and frozen seafood, eggs, yellow mee, kuey teow, laksa, meehoon, and all types of fruits.
