Prime Minister and Finance Minister yesterday presented the 2014 Budget which has been labeled by many as the GST and “ no sugar subsidy” Budget.
The implementation of GST and the removal of sugar subsidy will impact the lives of many Malaysians.
Pakatan Rakyat has many times stated that the GST should not be implemented as it will affect the lower income group of Malaysians who are already burdened by increased prices of many goods.
Yet the government in its eagerness to collect more revenue has chosen to announce GST implementation in 2015 without taking concrete steps to improve governance, curb wastage, leakage and corruption.
In defending the GST announcement, Prime Minister Datuk Najib has said that the government has decided to implement a fair and comprehensive tax system that benefits all Malaysians and his deputy Tan Sri Muhyidin was confident that the GST will not bring “too big of an impact” as the government has taken the effects of the consumption tax into consideration.
However, in a paper titled “GST is a regressive tax”, Dr. Lim Kim Hwa ( Fellow, Penang Institute) and Miss Ooi Pei Qi ( Research Analyst, Penang Institute) have in their analysis found that at 6% GST, prices could go up by as much as an additional 3.38%. and despite setting essential items like basic food, public transportation, education and healthcare as exempt or zero rated items, GST is a regressive tax (i.e. the lower income households will bear a higher tax burden than the higher income households).
Their analysis has shown that using 6% as the standard GST rate, the average household is expected to pay 2.52% of monthly income as GST (equivalent to RM 90 per month in July 2013 values).
It is no wonder why Najib and BN government no longer talk about the “People First “slogan anymore.
The removal of sugar subsidy is another measure which will affect many Malaysians due to the multiplier effect on prices of foods and drinks.
Prime Minister Datuk Seri Najib Razak, in his 2014 Budget announcement said 2.6 million Malaysians under the age of 30 were diabetic patients. As such, he said the 34 sen subsidy per kilogramme for sugar will be abolished from today, pushing the sugar price to RM2.84 per kg.
If price increase can be effective in getting people to consume less sugar, then all the taxes imposed on alcohol and tobacco should have been effective in reducing the number of smokers and alcohol drinkers in the country. But is this true?
The government should carry out public education on the need for people to cut sugar intake, instead of coming out with a lame excuse to remove sugar subsidy to make life more difficult for Malaysians.