Minister's 'rich' GST argument poor in substance
Idris Jala had argued that the goods and services tax (GST) to be implemented from April 1, 2015, will affect the rich more than the poor.
The Pemandu chairperson, who is also a minister in the Prime Minister’s Department, claimed that the poor would only encounter minimal impact as essential items were either zero-rated or exempted from the GST.
However, Real Estate and Housing Developers Association Penang branch chairperson Jerry Chan begged to differ.
Idris Jala had argued that the goods and services tax (GST) to be implemented from April 1, 2015, will affect the rich more than the poor.
The Pemandu chairperson (right), who is also a minister in the Prime Minister’s Department, claimed that the poor would only encounter minimal impact as essential items were either zero-rated or exempted from the GST.
However, Real Estate and Housing Developers Association Penang branch chairperson Jerry Chan begged to differ.
According to Chan, the poor would be hit the hardest as a result of the implementation of the six percent tax.
"Unfortunately, it is going to impact the poor more. The net is now cast and everyone will get caught in the net," he told a post-budget dialogue organised by real estate agent Henry Butcher Malaysia (Penang) Sdn Bhd.
"Even buying car tyres and engine oil means the GST comes (in)," he added.
Chan said the crux of the matter was that only a small proportion of the working population was paying income tax.
The implementation of the GST, he added, would be done without a minimum wage policy in place, and although the government provided handouts like BR1M as a social security net, it was not for everyone.
"Basicially, the GST taxes everyone but handouts benefit only a few," he noted.
Impact already being felt
Chan (left) also warned that the situation would be more dire for the poor when the price of electricity escalates, which it "progressively" has.
"This will lead to inflation. Prices of petrol and sugar went up before the budget. We are living in post-election time now and that means, bad news can come anytime," he said.
"Property prices will definitely go up and this also goes for lower-end property. For builders and investors, inflation is good," he explained.
Chan said the impact of the GST was already being felt, even before its implementation.
"It has led to fear and anxiety over the rising prices of goods. For sure, prices are going to go up and up," he cautioned.
Chartered accountancy firm KPMG partner Ooi Kok Seng said the rich would enjoy some sayings due to the GST implementation.
"For those in the top tier tax bracket who have to pay 26 percent in income tax, the minimum taxable income has been increased from RM100,000 to RM400,000.
"The GST has resulted in savings of RM7,200 for those earning between RM100, 000 and RM400,000.
"The RM7,200 translates to them being able to afford RM120,000 worth of goods on which GST imposed," Ooi said.
Those who never paid taxes before (income less than RM4,000) would feel the pinch as now they must pay GST for living expenses such as clothes and shoes.
However, Ooi added, the GST and removal of subsidies in the long run would benefit the country and increase salaries, provided it was implemented "holistically and without leakages".
The dialogue was chaired by Henry Butcher Malaysia (Penang) director Jason Teoh, accompanied by Hong Kong Bank senior branch manager John Lau as well as entreprenuer and expatriate living in Penang, Michelle Grimsley.
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