GST: Paying Less?

I am posting this letter as it is a response to Mr Lau Beng of Subang Jaya who touched on it last week. Let us look at the arguments and see whether the premises for discussions are correct.

It is printed in full from the online STAR.

"I REFER to “The poor will be badly hit by the GST” (The Star, Dec 3). What surprised me was that the writer was not sure whether the existing sales tax and service tax would be abolished when GST is introduced.

He mentioned that the Government was unlikely to forgo a 15% sales and service tax for a 5% GST. It has been mentioned many times – and published too in the media – that GST will replace sales tax and service tax.

In his Budget speech recently, the Prime Minister clearly mentioned that if the Government were to introduce GST, the rate would be lower than the current sales tax and service tax.

About a week ago the Second Finance Minister announced that the proposed rate for GST would be 4% and this was widely reported in major newspapers.

Currently, a wide range of goods is subject to 5% or 10% sales tax and 5% service tax on selected services. By simple calculation and logic, I would say that the poor should not be badly hit if they were to pay the 4% GST.

Many of us may not realise that we are indirectly paying 5%-10% sales tax on many goods that we buy; sales tax is already charged by the manufacturer.

The writer also mentioned that eating out at air-conditioned restaurants will see an increase of 5% in the food bill. At the moment there already is a 5% service tax charged by many restaurants, pubs and hotels.

There is also 5% service tax charged on several other services such as on telephone bills, lawyer’s fees, and by workshops and car parks. This 5%-10% sales tax and 5% service tax will be replaced by a lower GST rate of 4% which should benefit the rakyat at large.

The Government has been emphasising on “People First” and with that has given the assurance that the poor will not be unduly affected as essential goods and services will not be taxed under the GST regime.

To me the proposed GST rate at 4% will not burden the lower and middle income groups as the present sales tax and service tax will be abolished.

As a consumer we should have an open mind and trust the Government’s promise that GST will not burden the rakyat.

OPEN MINDED RAKYAT,
Shah Alam, Selangor. "

So, it is up to you to take this person's argument.

Whatever it is, let us not be made suckers!