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GST Does Not Burden The People - FOMCA
KUALA LUMPUR (Bernama) -- Consumers need not worry of the implementation of the Goods and Services Tax (GST) as they will not be burdened with a higher cost of living as claimed by some.
The treasurer for the Federation of Malaysian Consumer Associations (FOMCA) Mohd Yusof Abdul Rahman in giving this assurance said consumers too should not forget that certain goods and services are exempted from GST.
"In fact many consumers are unaware that even now they are paying sales and services tax (SST) in many of their purchases, including when buying cars, clothing and food at restaurants and also on imported items," he said to Bernama.
GST IS COMPREHENSIVE AND FAIR
GST at a rate of six percent, that will become effective on 1 April 2015, is a comprehensive and fair taxation system. And the proposed rate is far lower than in many countries that have adopted such taxation system, for example Singapore imposes 7 percent rate for GST while India imposes 14.5 percent Value Added Tax (VAT).
Therefore, Mohd Yusof hoped that consumers would see GST objectively instead of listening to unsubstantiated claims that it would affect the medium and low income group when they too are paying the SST at present.
Prime Minister Datuk Seri Najib Tun Razak when presenting the 2014 Budget pointed out that the current SST at a rate of 16 percent has a number of shortcomings, including double taxation on consumers and no tax exemption on exports.
Najib also listed the items where the GST is exempted - rice, sugar, salt, flour, cooking oil, lentil, chili powder, spices, salted fish and etc. Also water supplied and the first 200 unit of electricity for domestic consumers are exempted from GST.
Passports, licence, healthcare and education are also exempted from GST, along with fares on public transport - LRT, buses, ferry, boat - and even toll charges.
BETWEEN SST AND GST
Then what is the difference between SST and GST?
GST is a broad based consumer tax based on the value add concept. The tax is imposed at every level of the production and distribution of goods.
This is in contrast with the SST, where it is only imposed at the end of the value chain, often when the goods leave the factory or enter the country.
In avoiding double taxation, under GST traders can seek credit inputs something that previously they have to bear and often it is passed to the consumers.
Mohd Yusof, who is also the President of the Selangor and Federal Territory Consumer Association, said consumers have to know that GST is more transparent compared with SST and would help to rein in unscrupulous traders who evade tax.
GST can only be charged by traders who record annual sales of at least RM500,000 and the tax collected have to be remitted to the government.
LAWS THAT PROTECT CONSUMERS
Deputy Minister in the Prime Minister's Department Datuk Razali Ibrahim said the government is still open to the public opinion on GST and is ready to fine tune the taxation system to meet the aspirations of the people.
"GST is necessary. This is because the government is losing tax revenue as many businesses are charging taxes on customers but not remitting them to the government," he said.
The government is committed in protecting the consumers through the Price Control Act and Anti Profiteering Act 2011 to prevent traders from profiteering.
Razali said other laws too would be used to protect consumers and control the rise in prices after the GST is implemented.
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