‘Maximise GST break by spending more’

KUALA LUMPUR: The public should be maximising the zero rated Goods and Services Tax (GST) period by spending more.

Such increased spending can benefit the local economy and boost the country’s economic growth.

With a GST break on 417 items, the public can enjoy better purchasing power– at least until the Sales and Services Tax (SST) kicks in on Sept 1.

The Finance Ministry has stipulated that the zero rated GST be applied for goods and services made in Malaysia as well as those from overseas.

Thetrade-offisthatthiswillcause the government to lose potentially RM42 billion in revenue. LOWER PRICES A survey by the Domestic Trade and Consumer Affairs Ministry found that in June, there was a price drop in only 70 per cent of the 417 items qualified for zeroGST.

The public had therefore yet to fully benefit from the incentive, said its minister Datuk Saifuddin Nasution Ismail.

The survey which ran from June 1 to 30 found that the prices of essential items declined between 0.04 and 13 per cent.

Prior to June 1, 2018, some 38 percent of items saw a price increase despite it being exempted from GST.

The percentage covers 98 goods, most of which were fresh produce, seafood and other products with short shelf life as well as products which price are subject to supply and demand as well as weather conditions. There was also nearly two per cent increase in standardrated supplies affecting three out of 156 products.

The vice- president of the Federation of Malaysian Consumers Associations (Fomca) Mohd Yusof Abdul Rahman said that consumers might not feel the impact of the lower prices as the majority of essential items have already been exempted of GST

That is not the case as the prices of goods are still the same, it is only that there is no longer a six per cent GST surcharge on it. For example, if the price of an item is RM10, a six per cent surcharge would make it RM10.60. But when the GST is zero-rated, they would still need to pay RM10. Mohd Yusof Abdul Rahman, Fomca vice-president

since the tax was introduced on April 1, 2015.

Consumers needed to correct the perception that a zero-rated GST meant lower prices for all goods.

“That is not the case as the prices of goods are still the same, it is only that there is no longer a 6 per cent GST surcharge on it. For example, if the price of an item is RM10, a 6 percent surcharge would make it RM10.60. But when the GST is zero-rated, they would still need to pay RM10.

“The confusion that arose might be because the prices displayed were not inclusive of GST.

“In addition to that, the premises or shop that claim to not impose GST on its goods might have been absorbing the cost themselves all the while. This might be why there were no changes in prices despite the GST break,” he explained.

A senior lecturer at Universiti Utara Malaysia ( UUM)’s School of Economics, Finance and Banking Muhammad Ridhuan Bos Abdullah said that as zero rated GST only applied to goods starting June 1, goods that were manufactured prior to the date would still be bound by the GST surcharge.

However, such exceptions should not affect GST- exempt goods like essential food items.

“A bigger change (in price drop) would depend on the actions taken by manufacturers during this zero- GST period.

“Manufacturers would typically respond by saying that they had to factor in input costs (including those affecting imported items) and regulatory requirements that need to be adhered to. This is when the government should step in and monitor the situation from the beginning of the supply chain until the end,” he told Bernama.

Ridhuan said that reducing the prices of goods within a short time frame by giving a GST break was not as effective as supply- side policies such as government subsidies, reducing regulatory burden as well as corporate taxes.

“Most of the supply chains will start off with an existing balance (with GST) and even with the introduction of the SST, there will still not be a significant drop in prices of good in the short term.”

On the move of some restaurants that increase the prices on their menu after the implementation of zero GST, FOMCA’s Mohd Yusof said that consumers had the power to choose and take action.

“The price of food (in restaurants) are not controlled by the government but is up to the restaurants themselves.

“Consumers need to decide for themselves. If they fi nd the prices exorbitant, then they can choose to no longer patronise it.

“If they still frequent a restaurant despite realising how expensive it costs to dine there, they are saying that they are actually okay with the price,” he said, adding that consumers need to exercise their rights to demand for fair prices.

Boycotting a restaurant or lodging a complaint to the relevant authorities were also other ways they could use to pressure a business to change unfair business policies and reduce exorbitant prices. — Bernama