What is GST and how will it effect us? – My take

The Goods and Service Tax (GST) would soon be implemented and many are worried.  As far as I have heard, many are not for the implementation of the tax because they think it will increase the prices of goods and services, which is true and false at the same time.

GST is a new tax for Malaysia, and is a broad-based consumption tax (tax on your spending) which affects all parties in a multi-stage taxation system across the value chain from manufacturing to sales, it is based on a tax-on-value-add concept which avoids duplication of taxes.

The reason for such scepticism and the worry over GST was largly due to the fact that the opposition has been effectively attacking the new tax system, despite massive efforts made by the government to shed light on GST and its coming implementation. The public, many of whom are still confused and illiterate over GST, are too lazy to learn about the new tax system, hence making them gullible to whatever is said by the opposition parties.

In fact, the oppositions attack over GST is so effective that the former Prime Minister, Tun Mahathir Mohamad, has called for the BN government to scrap the new tax system or lose power in the coming elections.

Well, I read a few articles regarding the implementation of GST, and I can’t really blame the general public for listening to hearsay. The whole GST explanation is complex and complicated that it would easily make one confused.

Add, the fact that some speakers giving GST talks are not good in explaning, further elevates the number of misinformed public.  If you are a teacher, you’d know very well that learning something is easier than teaching someone something new.

I too almost gave up on knowing about GST, but before I started to publicly complain, I needed to know more, and hence why I decided to force myself to read and understand how it works.

Anway, after reading and understanding, with the help of several info-graphics, I can say that GST is a good tax system which would help the nation increase its revenue.

I am saying this because everyone is taxed fairly at a flat rate under GST, if compared to the previous system, where the consumer pays the biggest taxes due to multiple type of taxes (6-15% tax), compared to the manufacurer whom can evade taxes easily, or only pays one tax.

This means, prices of certain items, used to be taxed both service tax (6%), and goods tax (5%), would see one flat rate of 6% across the board, and hence the drop in prices, supposedly, idealistically.

But, in reality, prices of goods are set to increase with GST because everyone is taxed at 6%, and businesses would find ways to pass the buck to consumers by increasing their prices. With the government not allowing GST to be absorbed, one can only expect businesses to find ways to pass the taxes to the consumer and retain their profit margin.

An example can be seen based on the image below (which i obtained from savemoney.my )

Lets say the manufacturer decides to pass the buck (which is likely), he will increase his manufacturing price, and this will result in prices of items to increase until the end consumer.  Eventually, the price of the product already includes GST although the manufacturer would deny such claim.

This means that prices of goods would not go up directly because of GST, but rather by the greed of business owners whom will be taking the opportunity to increase their prices, with GST as an excuse.

With the opposition parties continuously reminding us of who wanted to implemented GST, the blame would surely fall on the government, and that is epically heard in discussions on GST nowadays.

That said, GST is indeed an ideal system meant for honest people only, but since most of us in this world aren’t 100% honest, it has and will be a fantastic opportunity to increase profit while having a ‘scape goat’ to blame.

But despite alll those facts, this video below, meant to entertain, is one hell cool one despite the fact that it is slightly twisting the facts.

Hope u enjoyed the video as much as I did.