Wednesday, June 11, 2014

Disaster if fuel comes under GST

According to Deputy Finance Minister Ahmad Maslan, the government has yet to decide whether to exempt petrol and diesel from the Goods and Services Tax (GST).

This is certainly scary news, especially to those who believe that BN leaders are sincere when they say they run a government that cares for the plight of the poor. These citizens would have assumed that GST would not apply to such an essential item as fuel. Everyone knows that when petrol and diesel become more expensive, the price of nearly everything else will go up.
So, Ahmad’s statement is ominous.

The authorities can spin it this way and that, but they cannot convincingly argue against the belief that price hikes are inevitable once GST becomes effective, especially if it also applies to fuel.
Under the currently applicable Sales and Services Tax, most goods are exempted. Under GST, however, most goods will be taxable. This means everyone, regardless of income, will be paying tax.
To see how much the poor will suffer, let us consider what will happen to someone earning RM1,200 a month. With such a low income, we can assume that he will spend all of it within the month. Since most items will come under GST, we can again safely assume that he spends RM1,000 on taxable items. With GST at 6%, this means he pays RM60 every month in taxes, leaving him with a real take-home pay of only RM1,140.
Contrast the poor man’s case with that of a company executive earning, say, RM12,000. If we use the same formula as above, this person’s take-home pay is still more than RM11,000.
Therefore, while GST exacts great suffering from the poor, the well-to-do won’t feel even a pinch.
So what kind of caring government are we talking about? GST takes away a lot from those who have little and just a little from those who have a lot.
It boggles the mind to know that the government is still undecided on whether petrol and diesel will be exempted from GST. It should be a no-brainer.
“Of course petrol and diesel must be exempted from GST,” says Shah Alam MP Khalid Samad of PAS in reaction to the Deputy Finance Minister’s statement. “What is the government thinking? More ways to tax the rakyat from every way possible?”
It is now clear that the nation’s finances are in dire straits. Otherwise, why can’t the GST be postponed to the year 2020, when we are supposed to have achieved developed nation status?
Is burdening the poor the hallmark of a compassionate government?
Homeless folk
There are already many homeless people in our midst, especially in urban areas, as a visit to the area around KL’s Central Market will show. Will the proceeds from GST be used to help them?
In Britain, proceeds from that country’s equivalent of GST, called Value Added Tax, are ploughed back to citizens. For example, the government offers abandoned buildings to the homeless for one pound sterling per unit. The purpose of this programme is to get the homeless off the streets. At least they can have shelter in harsh weather.
Our government must bear in mind that the wider the income gap between rich and poor, the more society itself will suffer. There will be more snatch thefts, burglaries, murders, baby dumping, drug smuggling, human trafficking and other criminal activities as people become more desperate in trying to cope with a hard life.
The government must definitely exempt petrol and diesel from GST, knowing that it will bring about a general rise in the cost of living.
This is not to say that GST is bad per se. Some businessmen don’t think so. Someone in the real estate business told this columnist: “GST is an efficient form of tax collection, but what is of paramount importance is that the proceeds should be used to benefit the rakyat.”
The government of Malaysia must prove that it lives by its “People First” slogan.