Sunday October 14, 2012

Consumers assured of a fairer tax system

By SHAHANAAZ HABIB

“YOU know that shirt you are wearing? You've paid tax on it,” Customs Department director-general Datuk Khazali Ahmad points out during a recent interview on the proposed Goods and Services Tax (GST).

What people do not realise, he adds, is that the Customs Department has been collecting sales and service taxes over the years. This is because the taxes have already been included in the prices consumers pay at the check-out counters.

And the amount collected is significant. Just take this year alone, till Oct 4 even without the GST the Customs Department has already collected RM7.3bil in sales tax and another RM4.36 bil in services tax.

Last year, it took in RM8.57bil in sales tax and services tax came up to RM4.98bil. In 2010, its collection for sales tax was RM8.17bil and RM3.92bil for services tax.

“Some people are not happy with the GST because they think the Government is introducing a new tax to add to the tax that is already in place.

“But the GST is not a new tax. The GST is only a replacement tax (to replace the sales and services tax) to make our taxing system more efficient and transparent,” says Khazali.

He understands the people's fears that the GST will affect prices of goods, services and their consumption pattern. But these fears are unfounded, he says.

“There is a zero tax on a lot of basic necessities (see chart) and we are giving exemptions on critical services (schools, hospitals, public transport, tolls, banking),” he explains.

“Consumers should be better off as essential food like rice, vegetables, cooking oil and fish are not subject to GST at all.”

Currently, the people are already paying a sales tax of 5% to10% and services tax of 6% on goods and services. With a proposed 4% GST rate, prices of these goods and services would in fact, be down.

He says this is because suppliers and manufacturer get a refund on what they pay as GST to produce their goods; so with the GST regime, they would now have to remove these elements from their cost.

“We have gone around to meet the suppliers to make sure that whatever cost savings they get (from their refund), will be passed on to the clients and consumers. We will ensure the public do not pay more when the GST is introduced.”

However, for certain goods and services that are now not subject to any sales or service taxes, there might be an increase in price with the GST but the rate should not be more than the GST proposed rate.

Khazali says the Customs Department will work closely with the Finance Ministry, Domestic Trade, Co-operative and Consumer Ministry and consumer associations to monitor prices and release a shoppers' guide to the rakyat so that they know how much they should be paying.

They will also get hypermarkets to co-operate and be the price-setters.

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Sunday October 14, 2012

Consumers assured of a fairer tax system

By SHAHANAAZ HABIB