Big businesses won't be paying the general sales tax (GST) and we, end-consumers, will be 'subsidising' the big boys.
Governments have fallen because of the GST and Finance Ministers have resigned.
I hope, the government’s tax package is not an attempt to trick workers into thinking that they will be better off after the proposed tax cuts.
I also hope it will not trick people into thinking that they will be better off after the so-called “compensation”, despite the introduction of a goods and services tax (GST).
Consider this. Our tax base is perhaps only 15%, i.e. only about 15 percent of the population pays tax.
The balance have not or were not paying taxes – kampong people, self-employed, ordinary folks outside the tax bracket.
Now, all are caught in the tax trawler net and pay consumption tax.
Th government claims it will compensate the ordinary people. In which case how will it do this and what will be the size and value of the compensation?
So what is the purpose of the GST?
The GST, levied at a rate of x %, will replace the government’s wholesale sales tax and other indirect taxes.
Big businesses won’t pay
How much will the abolition of these taxes cost and how much will the GST raise?
I don’t have the figures but I am sure the reasoning by the government is that the GST will increase the amount of tax collected.
Meaning the GST will increase government revenue by X amount. Revenue will likely to increase over time because of the expansion of the service sector.
But here’s an interesting question. Somebody will make money as a result of introducing and implementing the GST.
The question is who will collect the revenue?
My guess is it will be collected by some companies already proposing or about to propose further privatization of government services.
Who is actually paying the excess revenue that government collects after GST?
If we study carefully, we can know who is NOT going to pay – big business!
The tax burden on Malaysian business will be reduced by more than the GST revenue collected.
How so? Because the business which exports a lot will be treated to a substantial decrease in costs because they will be eligible to have GST they pay on business inputs refunded.
So if businesses don’t pay, who pays? The workers and people.
GST con-job
Crap! We will be subsidizing these business people.
The GST is not a tax on business as input tax credits ensure that businesses effectively do not pay GST on their inputs.
GST paid by business on raw materials, tools, electricity and rent is refunded. Business is exempt from paying the GST.
The only GST payer is the end- consumer – us! Now you know why representatives of big business are waxing lyrical about the tax package. The government says it compensate the people.
The advisors tell the Prime Minister Najib Tun Razak that income tax cuts, welfare rebates, compensation to government beneficiaries and self-funded retirees that is costing money will all be now funded out of the projected revenue surpluses over the next few years.
But what if tax revenue is not as optimistic as planned?
Will the government cancel or reduce the income tax cuts and the compensation package? Where will the government find money to pay the compensation? Where will this surplus come from?
Suddenly I am remembering the removal of subsidies which the government is carrying out. Removal of subsidies will cause severe hardship to the people who will duly translate that into political backlash for the government.
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