I’m still snowed under with work commitments, so the blog will be on temporary hiatus until I can get a handle on my new job responsibilities.
Nevertheless, I can’t resist commenting on this (excerpt, emphasis added):
Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah’s recent explanation of the goods and services tax (GST) is illogical and only confuses the Malaysians, a civil society group said.
The Oppressed People's Network (Jerit) refuted Husni’s remarks that those earning RM2,000 a month would only pay RM15.06 of tax because of the GST.
“The finance minister appears to try to confuse the people with his statement,” Jerit Coordinator E. Parames said in a statement yesterday....
...The GST will come into effect on April 1, 2015. Essential items such as flour, rice and sugar and public transportation services such as bus and train fares are exempted from the tax.
Citing Malaysia’s high household debt of 83% to the gross domestic product (GDP), Jerit said that there is no assurance that zero-rated items would exempted from tax, despite Putrajaya saying otherwise.
“As an example, rice is zero-rated item but the things used to produce rice and process it such as fertiliser, plastics and transport for distribution will all be charged with the GST,” said Parames.
“The GST applied on other items used to process rice and transport services will cause an increase in the price of rice,” he added....
The article title should by rights be “People are still confused over GST”.
What does “zero-rated” mean? It has a totally different meaning from “exempt”. From the point of view of the consumer, you want to see zero-rated much more often than exempt.
When a good or service is GST-exempt, the good or service provider has to absorb all GST charged on any input. While the consumer does not in principle pay GST on the final good or service, there will be an element of GST involved from the cost of the inputs, which could raise the final price. GST-exempt goods or services thus may actually have GST embedded in the price consumers pay.
When a good or service is instead zero-rated, the good or service provider has the right to reclaim from Customs any GST paid on inputs. In other words, not only does the consumer not have to pay any explicit GST on those goods or services, there is no embedded GST from inputs in the final price either, because the government refunds the tax.
I’m afraid Jerit is the one who’s actually confusing the people.