A GST jolt at the ‘chap fan’ stall
P GunasegaramPublished: Apr 22, 2015 8:26 AM | Updated: Apr 22, 2015 8:33 AM
QUESTION TIME
Well here I was at the ‘chap fan’ (Chinese mixed rise, err, rice) stall one blistering Saturday after the introduction of the much dreaded goods and services tax or GST which was going to send prices of goods higher - how much higher was the question.
QUESTION TIME
Well here I was at the ‘chap fan’ (Chinese mixed rise, err, rice) stall one blistering Saturday after the introduction of the much dreaded goods and services tax or GST which was going to send prices of goods higher - how much higher was the question.
I smiled as I looked over the more than 50 dishes laid out for us, anything from an array of vegetables to soup, fish to meat, soybean concoctions, roasted, braised, fried - you name it, it was there. A half-hundred of mouth-watering, delectable dishes. And they are cheap.
There are few places that you can have things so cheap: two fish/meat dishes plus a vegetable for RM6. Now, that’s a bargain right, even if it is a suburb of KL/Klang; Setia Alam to be precise. Heck, prices here are the same as in KL anyway.
And no GST, right? Even if they sold more than RM500,000 a year, they are not about to tell Customs or Inland Revenue that. They won’t be that foolish. And therefore they are exempted from GST, correct? Yes, it must be so.
And so I took my pick of what I wanted to that day. Despite the choice I was spoilt for I stick to some stock favourites. But I am not so indelicate as to tell you what they are. And I was settling in for a good meal. Until...
Why, I asked the lady behind the counter, why is it 30 sen more expensive? She looked at me plaintively as if asking from which planet I was from. In broken Malay, in reply to my broken Malay, she said harga semua sudah naik, oh .
Not wanting to spoil the pleasure of a nice, still cheap meal, I did not argue. Anyway, what would it look like, arguing over a mere 30 sen. But it’s the principle of matter, no? Yes, I know that’s what all the skinflints say.
Still I took it up with my companion at the table - my wife. We calculated the amount, 5 percent more, a discount of one percentage point over the GST’s 6 percent. Does she not have to issue a receipt? I thought aloud. She did not say it was GST, she said it was a price increase, came the reply. But is that not profiteering, I thought, this time silently.
Not long after the meal, I ventured to a supermarket to buy a carton of our favourite milk, an Australian brand which we being middle-class snoots thought tasted better in coffee and tea than the other brands on the market. RM9 per litre. But did it not cost RM8 before that? That’s the listed supermarket price, before GST!
I did my math: that’s an increase of 12.5 percent. Now add another 6 percent for GST, and that’s a price increase of almost 20 percent. Now before you say I deserve it for buying foreign (most milk is foreign anyway, we have very little of our own milk), just give me some space to make a couple of points, okay?
As far as I can recall, our currency has gone down against the US dollar but not by that much against the Aussie dollar, which I can tell from vague recollection may have actually have gone down against the ringgit.
So why the 12.5 percent price increase? It has to be profiteering right?
Theory of rational expectations
Reminds one of the theory of rational expectations. My revised theory of this is this: whether rational or irrational, if people expect prices to go up, they will. I blame the opposition for this - if they had not kicked up all the fuss over GST, GST would have come and gone and all prices would have gone up by 6 percent, no less no more for the designated products. End of the matter.
But one thing puzzled me. What made the price go up at the ‘chap fan’ stall? The government can stop profiteering for the milk, can it do the same for chap fan?
Our resident expert explained. Small businesses, which cannot claim recovery of GST for input items because they don’t collect GST, can claim recovery of their input costs by adjusting prices upwards. Ahhhh, so. Remember, they pay GST on their rental for instance.
But if that was so, then why exempt some items from GST at all, unless you exempt GST on the entire value chain, which means don’t have GST at all? That had all of us stumped.
Well, if you have an answer, tell us. You might win the Nobel prize in economics some day, although we don’t guarantee you that. But we do guarantee you a column in our humble magazine.
P GUNASEGARAM is founding editor of business news and views portal KiniBiz .
I smiled as I looked over the more than 50 dishes laid out for us, anything from an array of vegetables to soup, fish to meat, soybean concoctions, roasted, braised, fried - you name it, it was there. A half-hundred of mouth-watering, delectable dishes. And they are cheap.
There are few places that you can have things so cheap: two fish/meat dishes plus a vegetable for RM6. Now, that’s a bargain right, even if it is a suburb of KL/Klang; Setia Alam to be precise. Heck, prices here are the same as in KL anyway.
And no GST, right? Even if they sold more than RM500,000 a year, they are not about to tell Customs or Inland Revenue that. They won’t be that foolish. And therefore they are exempted from GST, correct? Yes, it must be so.
And so I took my pick of what I wanted to that day. Despite the choice I was spoilt for I stick to some stock favourites. But I am not so indelicate as to tell you what they are. And I was settling in for a good meal. Until...
Why, I asked the lady behind the counter, why is it 30 sen more expensive? She looked at me plaintively as if asking from which planet I was from. In broken Malay, in reply to my broken Malay, she said harga semua sudah naik, oh .
Not wanting to spoil the pleasure of a nice, still cheap meal, I did not argue. Anyway, what would it look like, arguing over a mere 30 sen. But it’s the principle of matter, no? Yes, I know that’s what all the skinflints say.
Still I took it up with my companion at the table - my wife. We calculated the amount, 5 percent more, a discount of one percentage point over the GST’s 6 percent. Does she not have to issue a receipt? I thought aloud. She did not say it was GST, she said it was a price increase, came the reply. But is that not profiteering, I thought, this time silently.
Not long after the meal, I ventured to a supermarket to buy a carton of our favourite milk, an Australian brand which we being middle-class snoots thought tasted better in coffee and tea than the other brands on the market. RM9 per litre. But did it not cost RM8 before that? That’s the listed supermarket price, before GST!
I did my math: that’s an increase of 12.5 percent. Now add another 6 percent for GST, and that’s a price increase of almost 20 percent. Now before you say I deserve it for buying foreign (most milk is foreign anyway, we have very little of our own milk), just give me some space to make a couple of points, okay?
As far as I can recall, our currency has gone down against the US dollar but not by that much against the Aussie dollar, which I can tell from vague recollection may have actually have gone down against the ringgit.
So why the 12.5 percent price increase? It has to be profiteering right?
Theory of rational expectations
Reminds one of the theory of rational expectations. My revised theory of this is this: whether rational or irrational, if people expect prices to go up, they will. I blame the opposition for this - if they had not kicked up all the fuss over GST, GST would have come and gone and all prices would have gone up by 6 percent, no less no more for the designated products. End of the matter.
But one thing puzzled me. What made the price go up at the ‘chap fan’ stall? The government can stop profiteering for the milk, can it do the same for chap fan?
Our resident expert explained. Small businesses, which cannot claim recovery of GST for input items because they don’t collect GST, can claim recovery of their input costs by adjusting prices upwards. Ahhhh, so. Remember, they pay GST on their rental for instance.
But if that was so, then why exempt some items from GST at all, unless you exempt GST on the entire value chain, which means don’t have GST at all? That had all of us stumped.
Well, if you have an answer, tell us. You might win the Nobel prize in economics some day, although we don’t guarantee you that. But we do guarantee you a column in our humble magazine.
P GUNASEGARAM is founding editor of business news and views portal KiniBiz .
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