On May 19, I have received a parliamentary reply to my question addressed to the Finance Minister regarding the imposition of GST on RON 97 effective April 1, 2015. I have sought confirmation if the previous sales tax of RM 58 sen per litre for RON 97 was abolished effective April 1, and if so, why was there no decrease in the price of RON 97 in April.
The reply which I received is as follows:
“Effective 1 April 2015, the sale tax component contained in the Automatic Pricing Mechanisms has been abolished. Although sales tax has been abolished, RON 97 is subjected to GST. RON 97 price did not decrease because there was increase in the average actual market price of RON 97 for March and April 2015, apart from the imposition of GST.”
The parliamentary answer has confirmed my argument via a statement on April 3 that the government must explain why RON 97 was not priced cheaper than RM 2.25 per litre effective April 1, 2015.
RM 2.25 inclusive of GST means that the pre GST price was RM 2.12 and GST imposed was RM 0.13. However, the sales tax earlier imposed was RM 58 sen per litre. So if all other conditions remained the same, RON 97 should be cheaper by RM 45 sen per litre. (Note: On June 7, 2012, former Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob had said in a statement that a sales tax of RM 58 sen per litre was imposed on RON 97, but not for RON 95.)
In November last year, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek has , said the average price difference in the cost of the fuels in a month would determine the retail prices for the following month.
So what was the average actual market price for March that has resulted in April RON 97 remaining at March price of RM 2.25 per litre despite the fact the effective April 1, sales tax of RM 58 sen per litre earlier imposed on RON 97 was replaced by GST of RM 13 sen per litre.
Since sales tax and GST has never been imposed on RON 95, its April price remaining the same as March price of RM 1.95 per litre has to imply that there was no change in the average actual market price of RON 95 for the preceding month.
This sounds rather strange. If the government claimed that there was increase in the average actual market price in March which affected the April RON 97 price, why did this not affect RON 95 at all since the price for RON 95 in March and April were the same, at RM 1.95 per litre.
Again, Hasan Malek should provide a clear explanation.