GST postponed … really?

Professor Tan Sri Dato' Dzulkifli Abdul Razak
My View - The Sun Daily
April 1, 2015

MANY must have sighed with relief that GST was postponed. Just like the taxi fares announced earlier. There seems to be a U-turn with immediate effect citing that the timing is not right. Now that the taxi fare hikes are on again, arguably GST may cause an extra burden to the public. Recently, SPAD had announced fare adjustments of 20-67% for taxis that would be effective immediately, while fare hikes for express buses would take effect on May 15.

SPAD said the fare increase was inevitable due to higher costs, including maintenance, borne by public transport operators. Incidences of traffic hazards due to poor maintenance have also raised concern. Allegedly, the relevant approval from the appropriate authorities was obtained before the announcement was made. However, the express bus fares and that of rail transport have been deferred indefinitely.

This partial re-reversal brought cheer to the taxi drivers who have been defying the use of meters due to what they regarded as an inappropriate fare structure. Consequently, many passengers have reportedly been fleeced especially unsuspecting foreign visitors. On top of this, Malaysian taxis are generally an embarrassment compared to even many Asean countries. Hopefully with the new fares, there will be a makeover the next five years in tandem with the desired developed nation status in 2020.

Not surprising the GST postponement is expected to bring even more cheer all round.

Unfortunately, this may not be the case because the GST concerned is NOT the "Goods and Services Tax" – rather it refers to "Great Shopping Time". April Fools! Gotcha!

Unchanged, the Goods and Services Tax goes into effect today. Too bad no postponement, despite several appeals, including some strong views from a former prime minister and a former finance minister. Even from the editorial of this newspaper. This is no April Fool's joke, putting a dampener on the "Great Shopping Time" slogan especially when it comes to luxury items and goods. The main anxiety, however, has always been for the people on the street who are already finding it difficult to make ends meet.

Personally, I am most worried on two fronts: the GST impact on healthcare and education, especially the sales of reading materials. We heard how certain actors in the sectors felt that the new tax regime is going to make healthcare more expensive, estimated by Customs GST division to be 3-4%. This will make it more inaccessible to those who are socio-economically deprived. It can also result in several unhealthy

developments like the emergence of quack practices or the promotion of fake items notably medicines (though more than 4,000 brands have been exempted so far) and devices ("only a number" exempted in the private sector) targeted at those who are desperate for treatment or cures. Already now the public healthcare sector is stretched at the seams not just because it is more affordable, but often it provided better services too. Inappropriate GST in the healthcare sector can only mean that the public healthcare sector will be overstretched.

The second concern is about the sales of books which took an 11th hour change of heart after much uncertainty. In fact, late last year in November the deputy finance minister was quoted: No intention to exclude all books from GST.

Reportedly, local bookstores and publishers have all along been anxious generally and braced themselves for the effects of the tax. According to the Malaysian Book Industry Council, books (including e-books) have never been taxed, and the GST is shaking up the industry. While items like dictionaries, encyclopaedias, and text and reference, books, newspapers and religious books will be zero-rated and not subject to the tax, the standard 6% GST apparently will apply to other types of reading material, including fiction. This can further retard the attempt to make Malaysia a well-read, let alone a knowledgeable society. It is good therefore that the powers that be finally saw the light. After all, books are our cultural lifeline to the future and must be made as accessible as possible to all. Otherwise, it can be counterproductive leading to reduced sales or a cash flow crunch that could kill the book business, in particular smaller ones, leaving the bigger bookstores with a monopoly of sorts.

So while the GST – Get Started Today – is an inevitable fact, we must first work on another GST – Garner Some Trust – so that the whole exercise can be implemented with confidence and transparently. Otherwise as the tax base is increased so too is the base for sickly and less informed Malaysians. This is one GST – Grimly Sad Tragedy – that we cannot afford!

With some four decades of experience in education, the writer believes that "another world is possible". Comments: letters@thesundaily.com