GST-Adding Salt to the Wound

Mr Lau Beng from Subang Jaya wrote in the online STAR today (5 Dec 2009) that the potential GST will spell more financial worries for the average wage earner.

In his letter,"Taxing time for Malaysians" he gives his views. I append in full his letter on the subject.

'A 4% GST is still too much for many Malaysians in view of the small monthly salary we get for doing the same work compared to people working in Singapore.

Workers in Singapore are paid five times or more. Though they pay 7% GST, it’s negligible to them because they get paid “fat” salaries.

With costs of living escalating over the years, Malaysians are feeling the pinch harder and harder and, besides, getting only a 5%-10% annual salary increment is too little and insignificant. Thus it is difficult to accept any more new taxes like the GST.

That means the rakyat has to tighten their belt further when the 4% GST comes into effect, because unlike the existing 5% Government Service Tax which applies only to certain establishments whose yearly income exceeds RM2mil, we will soon have to pay a tax for everything we use, eat and drink.

When you buy an electrical item with your credit card, some merchants will bill you an extra 2% to cover the bank charges.

So the total amount for the item with 4% GST will come up to 106%. A 6% charge is a lot to pay for a high-end item. This is not good for business as it will drive away the less affluent customers.

Apparently that is why there are so many small restaurants mushrooming in recent years in major townships – to avoid having to pay the 10% service charge and 5% government tax as well as for tipping waiters.

We still have a long way to go to reach developed nation status, so why not exempt foodstuff, medical fees/charges and public transport from such taxes for now? Exemptions should also be given for school books, education materials, computers, reading glasses, equipment for handicapped and invalid people, and essential medicines.

These goods and services are needed by ordinary folks who usually cannot afford to pay for them with their small incomes. With the 4% GST, these items will be beyond their reach.

Of course the Government should also do something concrete to help Malaysians get higher pay. Start with keeping abreast of employees in Singapore before we jump on the bandwagon of developed nations.

For now there is no rationale for a 4% GST across the board, because the poorer Malaysians will become even poorer and find it more difficult to make ends meet.

We also need to know specifically where the new revenue is going to. Simply put, the majority of the rakyat is not ready to shoulder the 4% GST.

LAU BING,
Subang Jaya.'

I couldn't agree with him more.