Prices of goods may not come down despite zero GST
KUCHING: Prices of products are unlikely to come down although Goods and Services Tax (GST) has been reduced to zero per cent starting today.
This was the observation of Kuching and Kota Samarahan Division Hardware and Machinery Merchants’ Association secretary general Henry Hii.
“Prices of goods are unlikely to come down in the long run because the two taxation systems GST and the Sales and Services Tax (SST) remained and running parallel. GST is not abolished but only zero-rated while the SST has been reverted back to 10 per cent,” he told The Borneo Post when met yesterday.
“Similarly, the SST for major products across the market was not abolished when GST was introduced and implemented in 2014 but only being revised to zero per cent. It will be impossible for traders or businesses to avoid taxes now when the two systems are in place,” he said.
The computer software installed to keep track of all transactions records including GST at every cash register will still be in place except the rate will be adjusted from six per cent to zero per cent from today onwards.
“At the end of the day, we still have to file and submit our statement to the government but we are supportive of the new government’s policies,” he explained.
“However, it cannot be denied that GST is a much better and more transparent taxation and management system which will prevent businesses or traders from evading or avoiding tax all the way from production to consumers,” he told said.
The main reason why products and services were more expensive post- GST, Hii who is also the general manager of Yung Kong Co Bhd observed, was because in the past, people could find ways to avoid the taxes.
“Then again, GST cannot entirely be blamed for the rise in the prices of products and services. There are many other factors causing products and services to become more expensive over time including the weakened ringgit and increase in oil prices,” he added.
“Over the decade, the ringgit value has dropped by about 30 per cent so the cost of products will surely increase especially for imports. As for oil prices, prices of fundamental things will go up because of logistics,” he said.
Hii added that the cost of a product has in fact been marked up including a percentage of profit added to the calculation of costs at different levels of the entire supply chain from production to distribution before it reached the end users.
“But the GST of 6 per cent charged at manufacturing and wholesaler level won’t be imposed to customers because they can be claimed back, meaning they will be returned but the problem is many have yet to receive the claim over the years,” he shared.
“Only when the product reached the retail side then 6 per cent GST is added to the final cost of the product in which consumers who used the goods and services have to pay. With GST, people felt that the things are more expensive because there was no way to avoid taxes,” he said.
Hii added that things were not entirely cheaper when Sales and Services Tax ( SST) was in force unless there were certain points in the supply chain where taxes were not paid or collected that in turn have enabled traders to reduce the price.
“There are good and bad points about both taxes but I trust that the new government will strengthen the nation economic position and do their best for what they have pledged the people,” he concluded.