21 Oct - 2 min read
Much has been said about the possibility and impact of the imposition of GST on the rakyat.
Many economists support it as good way for the country to earn additional revenue to reduce the nation’s debt and strengthen the economy. But on the other end of the spectrum; consumers worry about what this will mean to them. The common understanding is this: the more tax we are required to pay, the less disposable income we will have. But does a 6% GST mean an additional 6% will be added on all prices? The people at PwC say such a cause and effect is simplistic and in an article published with the Star, explains how a 6% GST will really affect our cost of living.
The Price Control and Anti-Profiteering Act 2010 makes it illegal for businesses to increase prices by 4% across the board with the introduction of GST (assuming GST is introduced at a rate of 4%) and any pricing decisions made by businesses must be justifiable otherwise stiff penalties may apply.
Well that’s good news. The article goes on to present tables with selected examples of how the GST will affect different goods and services as supplied by the Tax Review Panel based on a GST of 4%. The forecast amount by a tax expert currently stands at 5%.
Looking at the chart, the primary industries which will see a rise is healthcare (yes, because we need more expensive healthcare?), food and beverages and eating out. But the experts are quick to add:
The introduction of GST won’t automatically make everything more
expensive. What it will do is change the way we pay tax and provide a
more transparent, streamlined and fairer tax based on our consumption
Be that as it may, if the article is anything to go by, the honest truth is: yes, you will pay more but it won’t be up to 6% (hopefully). It will earn more revenue for the country which makes the economy healthier. A healthier economy is good for everybody. It would appear that the GST can be a good thing for the country in the long run but it isn’t just the collection of more tax that has many Malaysians concerned: it is how it will be utilised.
More good news: The government recently announced the GST rate of 6% will be reduced to zero percent, starting from June 1, 2018.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world