PRICES EXPECTED TO DROP BY MORE THAN 6PC FROM JUNE 1, SAYS ANALYST
Expert says cost of goods and services to go down once GST is zero rated
THE prices of goods are expected to drop by more than six per cent once the Goods and Services Tax (GST) is zero rated come June 1.
Universiti Tun Abdul Razak taxation expert Professor Dr Barjoyai Bardai said traders could get their GST refunds through credit tax for all types of input tax and purchase of cost of business operations.
“In that way, traders can lower their operational costs and, consequently, lower the prices of goods by six per cent or more, depending on how much savings they get,” he told the New Straits Times Press.
He was asked to comment on the Pakatan Harapan government’s move to zero rate GST for all goods and services beginning June 1 as an initial step to honour one of its election manifesto pledges.
The Finance Ministry had announced that it would begin a fiscal renewal programme, and that the Sales and Services Tax would eventually be reintroduced.
Barjoyai said the government had two choices for taxation — a tax that increased government earnings or a tax that helped to improve the welfare of the people.
He said the government had chosen the latter as it would increase the spending power of those in the Below 40 (B40) income household category.
“The zero rated GST was a means of helping consumers. The government placed the welfare of the people ahead of increasing government earnings.”
Asked whether there was a possibility that the government would increase the GST rate in the future, Barjoyai said this could be done.
“Since it has not been abolished, the government can at any time increase GST rates, but it would likely not be a popular decision.”