Thursday April 2, 2015
10:41 AM GMT+8

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APRIL 2 — “Why GST for sardine but not lobster?”

There was a group of GST protesters throwing out this question in front of the Customs Department headquarters.

Sardine is a very common food for ordinary citizens, especially the lower to middle-income groups. as for lobster, most people only have the luxury of gazing at the pictures.

So, the poor will have to pay GST for sardine while the financially loaded can escape GST for gulping the lobster?

It was said that the officials at the Customs Department were somewhat embarrassed and dumbfounded. In the end, they could only manage to come up with a convenient answer: The Parliament made the decision!

Little wonder GST has caused so much uproar and little wonder many were stockpiling commodities in frustration.

Sardine and lobster aside, we still have tons of unanswered questions, for example untreated chicken drumstick is GST-free while the same thing coated with curry powder will be subjected to GST.

I am a little worried. The GST went into effect yesterday, but not a single person in this country, including the Customs DG, actually understands the GST in its entirety.

What items are subjected to GST and what are not? What are the procedures like? How is the accounting software going to fit in? How about miscalculations? And what are the penalties for failure to implement GST correctly?

The authorities say initial glitches and confusion happened in all countries during the early stages of GST implementation.

But, do we have more of them?

Zero-rated, GST-exempt, standard-rated... that’s confusing enough as the lists are being perpetually modified. To make things worse, why choose to force it through at a time when the economy is slumping and market sentiment depressed?

The fact is, confusion did indeed exist in over 160 countries that have implemented the GST, and many governments were battered when they first implemented it.

During the 1993 elections in Australia, the Liberal Party of Australia under the leadership of Dr John Hewson was campaigning hard on an economic card. The party wanted to implement the GST to replace existing sales tax and reduce income tax. The election was seen as a sure bet for Hewson.

A trained economist, Hewson had a strong passion for GST, like all other economists, thinking it was the most efficient and fair taxation system.

Many middle class wage earners having to pay hefty income taxes supported Hewson’s GST, but the response from the lower and middle-income groups was lukewarm. These people were not worried about income taxes but GST.

To win the support of this group of voters, Hewson amended the content of his GST, putting food and other necessities into the GST-exempt list.

But then, that made the public even more confusing.

Ten days before the election, Hewson went on TV and was asked by the host whether the prices of cakes would go up if he were elected.

He struggled for an answer, saying it would depend on whether there were other taxes associated with the cake, and whether it was a birthday cake, and then whether the cake was decorated.

The public lost their faith in Hewson. In the end, what was seen as a sure bet for Hewson turned out to be a major flop.

Hopefully the Australian experience should serve as an inspiration to the BN government in Malaysia.

Yes, the Customs Department later issued an official statement saying lobster, a crustacean, was classified as a zero-rated fundamental food stuff while sardine was processed food and was therefore standard-rated.

Do you think it was convincing enough? — Sin Chew Daily

* This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail Online

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