GST will only be introduced after Anti Profiteering Bill is passed

The Malaysian Government will now first table the Price Control and Anti-Profiteering Bill in the Dewan Rakyat (Parliament) before it re-tables the GST bill.   The Anti-Profiteering Bill is expected to be tabled in June 2010.

The Anti-Profiteering Bill will prevent indiscriminate price increases following the implementation of GST.   Once the law is in place, it will allow the authorities to take action against unscrupulous traders who takes advantage of the situation to raise prices and use GST as an excuse.

The Deputy Finance Minister Datuk Seri Awang Adek Hussin made the announcement in the Dewan Negara (Senate) on 5 May 2010.

He stressed that there was no need for the public to worry about increase in prices of goods as most of the essential goods would be exempted from GST.

There are about 40 items that will be exempted from GST,   including agriculture produce  (like padi and fresh vegetables)   basic food items (like rice, sugar, salt, flour, cooking oil),   livestock  (like cow, buffalo, pig, goat, chicken, duck),  eggs (including salted eggs), fish, prawn, cockles and squid (including the dried and salted ones).  There would be a cap on the amounts that are exempted.


Services with zero GST will include electricity supply for the first 200 unit every month for domestic consumers, the first 35 cubic metres in water supply every month for domestic consumers, goods and services meant for export and international services.   Suppliers of zero rated GST items and services are allowed to claim the GST paid on inputs in the production of that item, like overheads and raw material costs.



The Minister also said that only business companies with sales of more than RM500,000 a year would be subjected to GST.  This means 78 per cent or 433,558 business entities will be exempted from the GST system.

The GST rate will be capped at 4%.

With the introduction of GST, the Consumer Price Index (CPI) will reduce by 0.1%.  The sectors that are currently taxed under the Sales and Services tax (SST) will see a reduction in CPI that varies from 0.08% to 2.71%

Services  - 0.08%
Restaurants & Hotels - 1.2%
Communications - 1.86%
Transportation - 0.94%
Shoes & Clothes - 2.71%
Housing, Water, Electricity, gas, Fuel energy - 1.57%
Alcohol & Tobacco - 0.73%   

My one sen worth :
 Does it mean that shoes and clothes will become cheaper?  The SST for shoes and clothes is around 10% - 20% now.    With GST the tax is capped at 4%.    So cheaper shoes?   Lets see.


The Government is trying not to rely solely on revenues from Income Tax and petroleum forever.    The Goods and Services Tax is a new source of revenue, and is based on consumption rather than income.  GST would seem a fairer way to collect tax  as it is based on the buying ability of the citizens. 



The only reservation, is how the extra tax collected under GST (budgeted to be $1 billion per year)   is going to be used to benefit Malaysians in general.
 
 
Extracted from Bernama and theSun