Understanding GST: The Analysis II

Continuing from my previous posts on GST on the theory & analysis, this last post will focus on how GST affects us in our daily life, giving model scenarios in different fields. Below are analysis of the six areas that bound to take a substantial amount of our income.

FOOD/GROCERIES
As informed in my previous post, although some basic food & other items are exempted, there's the grey areas in the whole flow of selling of the goods to the end-part of the supply chain. The manner of how the GST will be charged on sales of these items (standard rate supplies, zero rated supplies & exempted supplies) at retailer level has not been clearly defined. Unless you are buying all your normal groceries at small sundry shops (which not subject to sales tax), barring any changes in implementation, GST shall be charged all across the board at retailer-level, which are the hypermarkets & supermarkets irregardless what items you are buying.

FINANCE
Financial services including all banking & insurance services are exempted

TRANSPORTATION
Transportation services such as LRT, taxi, train, ferry, boat & highway is exempted. Under certain circumstances as explained in this link, GST is taxable of these services too. Domestic transportation by air such as from KLIA to Penang, is GST taxable but taking flight from KLIA to international destinations is zero rated. On personal transportation, purchase of new cars is GST taxable. Buying petrol for your car is GST taxable. However, it is not clearly explained on what petrol price value of the GST will be taxed. In Singapore for instance, the price shown on the pump is already inclusive of GST. The receipt will specify the value of the GST shown separately. Judging from this, this should be practiced in Malaysia too.

EDUCATION
Enrolling your children in:-
- Government schools & tertiary institutions - GST-exempted
- Private nurseries/ kindergarden - GST exempted
- Private colleges / universities - GST taxable

UTILITIES
Electricity: Exemption given for first 200 units of electricity only. Calculating against the current TNB tariff rates (which I guess will be increased next year), this means any electricity bills costing minimum of MYR 43.60 are subject to GST 6%.

Water: Water supplies is a zero-rated supply & not taxable. However, the role of water concessionaires in Malaysia like Syabas in Selangor holds the key in deciding if this is GST taxable or not. Judging from the fact that Malaysian water concessionaires are either privatized government institutions or semi-private government vehicle, GST shall be taxable

Cable TV: Astro bills are GST taxable

Telecommunication: Supplies of telecommunication is a service, thus, all telecommunication-related bills such as Wi-Fi, handphone, fax etc are subject to GST

MEDICAL
Supplies of medical-related services such as consultancies & surgeries by government & private bodies are classified as exempted supplies. Thus, no GST involved.


With the lack of awareness given, this not surprising to see most people, especially in the rural & lower-income group are still in the dark about GST. Lastly, tackling the question on whether this GST implementation is good or bad??? 3 posts on this topic, giving you the useful information to decide for yourself. Not being diplomatic but it's depends on from which viewpoint you're looking at. Whether its from a macro-economist point of view, a government point of view or just an ordinary Joe's viewpoint, this is bound to be a hotly debated topic among politicians/citizens for years to come until the next election I guess.

A certain Mr. Prime Minister said GST will help the country from bankruptcy. Stupid explanation, I say. Greece & Portugal have GST & the countries are bankrupt. One thing I must say is, as a government of the day, the implementation of any new policy must comes with a clear direction, clear message to the people, giving realistic reasons (& not incredibly stupid reason like reducing diabetes among people by cutting sugar subsidies), besides coming up with standardized actions to complement it. U don't come out n say you need money to tackle the fiscal deficits but at the same time, wasted the citizen's money on unnecessary/unprofitable/doubtful projects. This is like a smoker father who tells his son not to smoke as it's bad for health. This won't gives u any credibility n will leads to loss of respect from the people. If only people from high above there can understand this basic rule......