-Dr. S. Ramakrishnan, 16 May, 2015

Since the GST announcement in the 2014 Budget in 2013, the government has been going around advertising that the 10% SST will be replaced by the 6% GST and, therefore, prices of goods will go down. Ministers and the government-controlled media pooh-poohed the concern expressed by the rakyat that inflation and increase in prices would be inevitable. Instead, they talked confidently and down to the rakyat – saying that essential goods would be exempted, some goods would be zero-rated and only luxury goods would be subject to 6% GST. They even went further and said the GST would benefit the people as it was in the interest of the people. “The new tax system fixes a 6% tax, as compared to the sales and services tax which amounts to 16%,” said the prime minister.

But what has taken place is the complete opposite of what the government advocated. The SST is a single-level 10% tax compared to the GST which is a 6% multi-level supply chain tax. The government concealed the truth and now it is out in the open. Prices of goods and services started increasing well before April 1, in anticipation of the compounding effect of the GST, whether or not the goods and services were to be GST-exempted. The GST is thus added to already increase prices. Peoples’ anger hit the roof when they had to dig deep into their pockets.

BN leaders had been talking about a decrease in prices with the introduction of the GST. Instead, prices went up. Obviously, there was very serious miscalculation between boardroom-planning and implementation on the part of the Customs. Issues like service charges and levying of the GST on goods produced from free trade zones were not considered until after the implementation of the GST. The list of goods and services to be included, exempted or zero-rated was announced on a flip-flop, piecemeal basis. All these contributed to the confusion.

Even the cost of pre-paid mobile phone top-up cards has increased by 6% due to the GST levy. Earlier, these prepaid top-up cards were charged 6% SST (Sales and Services Tax) but this has now been withdrawn and buyers are charged 6% GST. Why should Telcos raise the charges when the rates are the same? Telcos absorbed RM800 million in SST in the past but they are now passing this on to customers, and at a time when prices are going up. Communications Minister Ahmad Shabery Cheek’s inconsiderate and irrelevant assertion is that about two-thirds of the prepaid phone users are foreigners. To appease pre-paid users, latest news is GST will not be charged up-front but deducted as the card is used. Whichever way GST is taxed to the user of pre-paid cards.

The situation today is a far cry from what the government promised. For the first time, poor people are also being taxed on basic necessities like food and medicine. On May 1st about 20,000 or more gathered in the heart of Kuala Lumpur to protest against the GST. Not surprisingly, many kampung folks came from out of town to participate in the anti-GST rally. The GST and consequent inflation have made a big hole in the pockets of low-income earners. Deputy Minister Ahmad Maslan added insult to injury by twitting that traders who support opposition will not lower prices because GST is BN government policy. What transpired after the GST implementation shows that the government don’t have control or knowledge over the pricing mechanism in supply chain management.

The government knows that wages are stagnant and 80% of households earning less than RM3000 per month are eligible for the BR1M programme. No longer are there subsidies for petrol and sugar. The high prices of houses, cars, high cost of privatised medical care and higher education are eating into the pockets of Malaysians. Electricity, water supply and utilities like telephones and highway tolls are privatised and sold for profit. The common man’s hardships are never considered when government policies are being formulated. All that matters to the government is the interest of its rent seekers, cronies and GLCs. Years of ill-conceived policies have taken their toll on this country and public confidence in this UMNO-led government is at an all-time low. Unless it changes, its days are numbered.