Wednesday, May 05, 2010

GST on Sarawak

The Deputy Finance Minister informed the Senate yesterday that the Government will proceed with the implementation of the unpopular Goods and Services Tax (GST) after the expected passing of the Price Control and Anti-Profiteering Act in Parliament.

Datuk Seri Awang Adek Hussin argued that “there is a lot to be gained by the government and the country with the implementation of GST, among them, a new source of revenue.”

We agree that there is indeed a lot to be gained by the government as they will increase the amount of tax collected from the people, but what will be gained by the people who has to bear the burden of paying more taxes?

Sarawakians will be among the worst hit with the implementation of GST as the state is the fourth poorest in the whole Malaysia, only ahead of Sabah, Kelantan and Terengganu. Currently there are less than 8% of the working population in Sarawak who are paying income taxes. The remainder of the population just do not earn enough money to pay any taxes.

Once GST is implemented, everyone, regardless of whether you are unemployed, low income, a single mother, an elderly or disabled, you will have to pay GST for practically all purchases. As many Sarawakians are still living in poverty or at near poverty levels, the GST will badly affect their livelihood.

The Barisan Nasional government have insisted that basic necessities such as rice, flour, salt, sugar, meats and certain seafood items will be exempted from taxation, and the poorest in Malaysia will even save RM14.52 per annum with its implementation.

The Government's model is competely flawed because it assumes that the poor will only spend all their monies on GST-exempted basic goods. The poor will still have to pay GST when buying shampoo, clothes, shoes, cutlery, furniture, soap and other household items.

Even for tax exempted goods, the price is likely to increase despite the tax exempt, because the cost of production of items such as rice, flour etc. will increase due to GST.

While the Government may pass Price Control and Anti-Profiteering Acts, and promise enforcement, we all know that such enforcement will have very limited practical impact. The government cannot even enforce controls over taxi drivers who refuses to use meters in the cities, can we expect more from a nationwide enforcement of all shops? Furthermore, how is the Government going to penalise say a petty hawker, for charging RM0.10 more for his cup of teh tarik or RM0.20 more for his plate of noodles?

In the interest of many states which are still engulfed in poverty or near poverty, including hundreds of thousands of Sarawakians, we call upon the government to withdraw the proposal to implement GST.

To resolve the budget deficit and debt issues faced by the Government, the BN Government must first take concrete steps to reduce massive corruption, inefficiencies and wastages for all procurement and privatisation programmes and completely eliminate the entrenched system of rent-seeking and patronage, instead of taking the easy way out by shifting the burden to the rakyat at large.
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