PETALING JAYA: Some consumer groups want the list of items exempted from the Goods and Services Tax (GST) to be expanded to include other essential items, especially those consumed by the lower-income group.
Apart from rice, cooking oil and salt, they said, there were many other essential food items which had not been included.
“We are concerned over whether foodstuff such as canned sardines, bread and biscuits, which are essential goods as well, will be taxed under the GST,” said Consumers Association of Penang president S.M. Mohamed Idris.
“Such basic food items should be exempted as well because they are widely consumed by the lower-income group.
“The GST should be imposed on high-end food items that are consumed by the high-income earners.”
If not, he said, the poor – who spend most of their income on food – would suffer with the implementation of the GST.
The Sales and Services Tax (SST) will be abolished on April 1, 2015 and replaced with the GST, which has been set at 6%.
It was announced that the GST would not be imposed on basic food items such as rice, sugar, salt, flour, cooking oil, piped water supply, and the first 200 units of electricity per month for domestic consumers.
Some of the services exempted would be government services such as the issuing of passports and licences, healthcare services, school education and public transportation services, including highway toll.
However, Fomca said the Government should implement safety nets targeted at the poor instead of expanding the number of items exempted.
“If you exempt more items, then even the rich will enjoy the benefits,” said its deputy president Muhammad Sha’ani Abdullah.
“Instead of doing this, the Government should look into providing affordable housing and public transportation, which will directly assist the lower-income group.”.
Muhammad Sha’ani pointed out that transportation cost was the highest expense for the middle and low-income groups after food and housing.
“Also, instead of giving cash handouts, which can be misused, the Government would do better to issue vouchers that could only be used for specific items, such as groceries,” he added.
Among those who questioned the implementation of the GST was Serdang MP Dr Ong Kian Ming.
He said the items now being taxed under the SST were much less than those that would be taxed under the GST.
The number of items exempted under the Sales Tax (Rates of Tax No. 2) Order 2012, he said, runs to 250 pages.
But the number of items that would not be taxed under the GST is only 21 pages.
“This means the prices of the majority of goods and services will increase because of the GST, even after removal of the SST,” he said.
Ong said sales tax was now restricted to certain restaurants and professional services such as those provided by accountants, architects, motor vehicle service and repair centres and estate agents.
“Under the GST, it is possible that services such as those provided by certain tuition centres and hair salons will be taxed, leading to the prices for these going up,” he said.
– THE STAR