Thursday, October 20, 2016

Fairness of GST

FMT - The people don’t need GST and BN, says Guan Eng


I'm afraid I am disappointed with Guan Eng for criticizing GST. While I believe Najib has overexaggerated on GST saving Malaysian economy, Guan Eng please don't play politics with GST.

As for BN I leave it to the Malaysian voters to decide, whether they want BN to be the ruling party or the main opposition, but in either case, it can play a role provided it ensures first that there is no corruption among its members (BN members). I would not tolerate a one-party Malaysia, which is what PAS wants, wakakaka.

Back to my main disagreement with Guan Eng, GST is already a principal taxation mode in many countries including Australia, New Zealand, Singapore, Britain, etc because it simplifies taxation on goods to only one single tax instead of multi-taxes.

If correctly monitored, maintained and enforced it is the fairest form of taxation - anyone uses it, he or she pays taxes for it. In Malaysia it's 6%, while in other nations it is higher (10% in OZ). If we remove GST from oil, then oil may suffered from some other forms of tax. 

Don't conflate government subsidy for oil as GST. They are different. GST is just replacing other forms of taxes while government subsidies like pocket money, when removed, will naturally see a rise in prices or some loss to the pocket.

Some portion of the GST collected should be returned to state governments as state revenue, and not kept just by the federal government. That's what is being done in OZ though richer states like NSW and Victoria have complained that their share of GST have gone to states like WA.

I support GST where every consumer pays. As for government subsidies, we need a separate post to avoid mistaking one for another.


11 comments:

  1. i guess if lge/dap become govt, the gst stay, n he will blame bn like he did now in various issue, as if he is not in position to make change.

    that said, i am a bit puzle y gst is fairest, one example, toll is fair if there is alternative route n good public transport, otherwise both poor n rich pay the same amt of tax, how is that fair if the poor spend most income on necessities?

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    Replies
    1. do poor and rich buy same things, same amount and spend the same sums?

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    2. if we r talking abt necessities, i think more or less same, unless u tell me the rich shit 5 times a day.

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    3. you're avoiding the answers, like for example, the rich buy abalone, expensive perfume, etc

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  2. "... it is the fairest form of taxation.."
    Kt, I am really surprised by your statement. As I am sure you do know, GST is a regressive tax. The 6% tax paid on an expenditure has a bigger impact on the poor more than the rich. What I mean is the poor is likely to spend much, if not all, of his income on necessities whereas the rich's necessity expenditure is a much lower percentage of his income. (Yes, I am aware of some zero-rated as well as exempted items in the shopping basket.) In percentage term, a higher percentage of a poor man's income will suffer GST because it is a consumption tax; the rich is likely to save a portion of his income, thus avoiding GST. In other words, that 6% paid hit the poor harder than on the rich relatively speaking.

    I do, however, agree it is a simply taxation system which is quite efficient. M'sia should introduce GST some time in the future. Right now, the economic environment is such that it is hurting the poor hardest; coupled with the withdrawal of various subsidies on basic essentials, the kampong folks must be suffering really badly.

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    1. Thanks Low, yes it's true in part that the poor could suffer more than the rich in specific areas, but don't forget GST merely replaces some complicated multi-tiered taxes that were already in place, so on some items, the GST by replacing those in-place complicated taxes could make some items even cheaper. There is a mixed bag of cheaper and costlier stuff in today's basket

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    2. "... don't forget GST merely replaces some complicated multi-tiered taxes that were already in place.."
      KT, methink you are conveniently avoiding what I was alluding to. The poor (mainly kampong folks) does not pay SST or income tax at all - and that is (I estimate) over 65% of the population. Now they all suffer GST - they are all now netted into the taxation system irrespective of their earnings because taxation is levied on their spendings.

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    3. Thanks Low, I'm not sure how the taxation in Malaysia (prior to GST) had been as I have been away for quite a while, but in Aus, while GST does represent additional expenditure on a few items which were not previously taxed, most items which were already taxed, sometimes more than once, did and has become cheaper..

      Thus overall or on average, items have become cheaper or cost-even

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  3. "as i am sure u do know" no, kt dun know much abt gst in the context of fairness, thats y he talked abt abalone.

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    Replies
    1. rich people eat same food as poor people?

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    2. unlike australian, how many % msian eat abalone every day?

      gst is efficient n effective, nothing much to do with fairest, just admit u use a wrong term, but I know how typical dap fanboy argue a case.

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