IF there is one thing that has been occupying the minds of most Malaysians, it has been the implementation of GST come April Fool’s Day. Even now, there is still much confusion about how it will really affect each and every one of us.
The general perception is that with GST, prices of most things will go up by 6 per cent. In other words, if you have been buying a bottle of Vitamin C supplements for RM39.90 all this while, come Wednesday, the very same bottle will cost RM42.30.
But what exactly is GST?
The general definition of GST or goods and services tax is that it is a value added tax implemented on goods and services. It was actually mooted by the government in 2011 to replace the existing SST or Sales (10 per cent) and Services Tax (6 per cent).
According to the Royal Customs Department’s website especially dedicated to GST, it will eliminate double taxation under the current SST system and consumers will “pay fairer prices for most goods and services compared to SST”.
So, how is GST good for the country? It seems that Malaysia is not the only country in the world implementing the tax.
Australia, for example, introduced a 10 per cent GST on most goods and services back in 2000 to replace multiple state government taxes and levies. Meanwhile, Singapore’s GST was introduced way back in 1994, at 3 per cent. Since then it has seen several increases and currently stands at the rate of 7 per cent.
Singapore’s GST is levied on the import of goods, as well as nearly all supplies of goods and services.
Down in New Zealand, the Kiwis pay 15 per cent GST, also on most goods and services.
The Malaysian government maintains its stand that the implementation of GST will eventually improve the standard of living for the people, lower the cost of doing business as it does away with multiple taxes or cascading tax, and increase the country’s global competitiveness.
How are people reacting to GST in general?
With every effort to change, there is bound to be some resistance. Many Malaysians are not against GST, but feel that the country has not achieved a stable economic foundation to implement GST, just yet. Some economists, on the other hand argue, that the GST implementation is what the country needs to get back on track towards building a robust economy.
How does the GST affect us little people then? Will our bowls of Sarawak laksa and kolok mee see a 6 per cent increase?
Ideally, the prices of items that were all this while levied with the sales or services taxes will remain more or less the same (or in some cases, become slightly cheaper), since these two taxes will be replaced by GST.
Items that were not levied either sales or services tax will see that additional 6 per cent increase.
To better understand how GST works, Eye suggest heading online and looking up “GST in Malaysia”.
The official reference for GST is of course the Royal Malaysian Customs Department’s website (www.gst.customs.gov.my), which is somewhat technical in explaining GST using some legal and taxation jargon.
The consumer targeted website, www.savemoney.my is also a good reference point. The people behind the site have done a great job in explaining GST using simple infographics which make it easier for the layman to understand.
Over the past week, news dailies have also been reporting a mad rush by Malaysians to stock up on various products such as health supplements, baby diapers, coffee and toiletries, while others are taking advantage of current prices to buy their electronic gadgets before the anticipated price hike.
Spas and bars are also offering their regulars packages coupons at ‘current’ prices which they can claim throughout the rest of the year.
The same could be seen here in Sarawak over the past couple of days. It is similar to how people react each time a price increase in fuel is announced. Drivers would throng fuel stations and wait patiently in queue just to fill their tanks before the clock strikes midnight.
Only this time, it isn’t the petrol stations that are congested. Hypermarkets and supermarkets have been filled with shoppers who, immediately upon receiving their salaries, were seen stocking up on essentials from milk powder to beverages, disposable diapers and toiletries, trying to invest in saving as much as they can for the coming months.
Only time will tell how GST will affect us in the long run, and as it is with most changes, we will sooner or later adapt and somehow work our wallets around them.
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