The fables of GST according to Ahmad Maslan

GST WATCH: Deputy Finance Minister Ahmad Maslan is at it again. This time accusing traders who raise prices as being pro-opposition and out to tarnish Barisan Nasional.

“Traders who support the opposition will not lower prices and without ethics they stoke public anger because the Goods and Service Tax (GST) is a Barisan Nasional government policy,” he posted on Twitter.

Is there any empirical survey to support the notion that pro-opposition traders are the ones increasing prices? Or do these traders merely exist in the psychedelic fantasies of a delusional court jester out to save a sinking ship.

The simplistic notion that GST is better than Sales and Service Tax (SST), all because the tax rate is lower is simply wrong. At 6%, GST may seem lower than the 10% SST, but GST is a multi-level tax, that taxes the whole supply chain whereas SST taxes the end-consumer alone.

With GST, everything is taxed unless specifically mentioned as being exempted, while SST only allows tax for items that are stated as taxable. See the difference?

GST has a wider reach, allowing the government to draw in more income at all levels of society.

The notion that all products would be cheaper by 4% is false, because this line of thinking does not take into account the multilevel nature of the GST taxation structure.

Imports from overseas are GST-free, but the moment they enter Malaysia and get transported within our borders, GST applies. And as these goods change hands, GST is applied at every interchange. And ultimately the consumer has to pay the final 6% which is calculated after factoring in all overhead costs.

Can Ahmad Maslan assure us that there was an intentional reduction of cost throughout the supply chain, so that the eventual price of the item is reduced by 4% upon reaching the consumer?

Did the traders ethically decided to do business on a deficit by not taking a profit when the item changed hands throughout the supply chain?

Ahmad Maslan is explaining away a taxation system without taking into account the fundamental reason people do business – to make a profit. At every stage of a supply chain, profit has to be made or else it will drive many out of business.

Complex supply chains would inherently drive prices higher, take for example the construction industry. The supply chains that come together to construct a house would be levied the GST tax at every juncture. And even though the physical house itself may not be levied tax, the contributing push from the cost of production would drive the final selling price of the house up.

The compounded nature of the GST tax itself would offset the fabled 4% discount Ahmad Maslan so proudly proclaims.

So is it really pro-opposition traders who keep prices up?

The very nature of the GST taxation system itself is driving prices up. And traders who supply the eventual consumer are on the receiving end of a supply chain that is forced to pay 6% in tax and still make a profit. Eventually the cost of doing business – overhead and taxes – is passed onto the consumer.

In the end, can any sane person say that GST is good for a nation? A nation already struggling with a dipping economy, low wages and confused ministers who continually insult the intelligence of the very people that suffer under that tax.

The fables of GST according to Ahmad Maslan
29 April 2015 – theantdaily.com


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