BN’s GST burdens the poor disproportionately?
Aargh, so busy these days…
Let’s talk some GST.
I’m no economist, but isn’t one of the reasons a GST is a bad idea the fact that it burdens everyone without regard to their economic standing?
Thus, the poor would have to pay the same percentage GST as rich people.
I suppose this is like the issue of petrol subsidies. The way BN was handling it last year meant that the increased burden was shared ‘equally’ by rich and poor alike.
I imagine that a more (pakatan? :P) rakyat-centric economic policy would be one where the poor don’t have to bear even more economic burdens than the ones they are already struggling to deal with.
But perhaps Najib and his filthy rich cronies aren’t too keen about pulling their weight in the nation’s economy.
Also, as usual, Uncle Kit and gang couch it in pretty effective terms: No sense gaining RM1b from GST to lose RM28b to graft.
Then again, like I said, I’m no economist, so I’m all ears to alternative views :)
The best place to learn from is Singapore; its conditions on the ground are close to Malaysia, although I think the impact is worse in Msia.
In general, GST impacts poorer people more because GST is a broad-based consumption tax, and poorer people have larger proportion of their income spent on such consumption. Spore govt made sure its introduction and subsequent increases are accompanied by good measures to help the poor absorbing the impact. And it introduced it in very mild increases, from 3% in 1994, to 4% in 2003, 5% and now 7%.
In general, their GST rebates have helped to reduce the impact and by now make everyone so used to the GST.
I doubt the BN govt will think through as thoroughly with a heart for the poor, based on their track record of 52 years, although I must admit that I don’t have much detail yet. As some good comments have pointed out, Msian govt is better off focusing on plugging the leakages and graft, if it is truly sincere.
The big tax boys have been pro GST for years ‘cos it means lots of $$$$ fees (advisory, implementation and compliance fees). Pls do not listen to all the the gas that they fart. The taxmen will also be happy because of more $$$$, now based on gross amount not net amount, hence more bonus for taxmen. More income ma so more bonus la. The politicians also happy ‘cos more money to telan in view of new revenue source.
The average person not happy. How is it possible not to have high price for everything when there is GST for almost everything. Zero rated GST for essential items (e.g. food) are nonsense ‘cos to bring the essential items to people, it involves transportation, administration and consumption of GST goods and services. Hence price increase cannot be avoided i.e. indirectly GST flows to price of essensial items. Even in HK, GST has been suspended in view of the bad economy.
At one tax seminar, one very experienced indirect tax consultant said there are ways to circumvent the GST. So it is likely we will have cases of partial compliance e.g. there is collection from consumers but no remittance to gomen.
My worry is assuming all GST collections are remitted to gomen, how can the taxpayers be sure that the money is not being telan by politicians. Already leakage is 60% as admitted by Sarawak gomen.
nat,
The idea in GST is that the consumer of goods and services pays ; implicit in the GST is the assumption the poor consume less and the destitute consume next to nothing and will therefore pay minimal GST. There are good reasons for implementing GST, which widens the tax base. Of course, implementation of the GST is a little tricky and you can bet it will be used as justification for a round of price increases. I wonder how GST will be collected from small cash businesses such as hawkers, stall holders, food vendors and the like. Perhaps they will be exempted, which will ease some burden on the low income group.
SIngapore although a high income nation, has a GST offset package for every one of its citizen. Is our govt ready to do the same?
http://www.gstoffset.gov.sg/Overview.htm
GST the malaysia buleh style would mean “Give Some Tax-lar” so that Ministers Mentri Besar Kronik can take cash monies to banks overseas, from Zimbabwe to Switzerland to Uganda to Iceland and finally to Bulehland.
Aiyohhh, people must do more charity-lar so must promote “GST-lar”.