I refer to the Malaysiakini report Gov't to impose 4% goods and services tax .

Three things to beware of GST:

1. What GST is to Prime Minister Najib Abdul Razak may just turn out to be what the petrol pump price hikes were to Abdullah Ahamd Badawi.

Pakatan Rakyat would then be very happy for this GST to be introduced.

2. Loophole in GST. From other countries' experience, it has been known that customers and businessmen ‘cooperate’ to deprive the government of GST revenue.

How? Businessmen may say, ‘No receipt, you pay less by the GST amount’. That way, businessmen report a taxable income which is lower, and they pay less tax revenue.

A ‘win-win’ situation for businessmen and customers. The loser? The government. This is what I heard is being ‘practised’ elsewhere.

3. GST may hike up the inflation rate if poorly executed thus burdening the lower income to lower middle-income groups.

This because of what economists call the ‘inflationary expectation’.

When people perceive this to be the case (whether real or imagined), demand for wages could rise and if wages rise, prices will rise in tandem.

Outcome? Higher cost-push inflation.