Gerakan calls on gov't to tackle GST-driven price increases


KUALA LUMPUR: Gerakan has called on the government to tackle price increases as a result of the implementation of the Good and Services Tax (GST).

Its vice-president, Dominic Lau Hoe Chai, said despite the many benefits of GST to the economy, it cannot be denied that prices have noticeably increased, especially for fast-moving consumer goods.

He pointed out that the Consumer Price Index (CPI) jumped to 4.5 per cent in Feb – the highest in eight years – mainly due to the increase in petrol prices.

Data from the Statistics Department showed that sectors which have recorded the highest increases in their indices are transport (17.9 per cent) and food and non-alcoholic beverages (4.3 per cent).

On food and non-alcoholic beverages, which account for 30.2 per cent of the CPI weight, the increase was led by oils and fats (38.3 per cent) and vegetables (9.5 per cent).

Lau said unless GST is kept low for sectors which are essential to the public, it will lead to an increase in inflation and will not benefit consumers.

"No company will take the hike. They will pass it on to consumers.

"the GST should not spur the growth momentum of the national economy (at the cost of burning) a big hole in consumers’ already pin-holed pocket, and make it harder for people to afford fundamental necessities, such as food.

"After all, the GST is meant to ease the financial burden of Malaysians by replacing the previous sales and service tax, which was at a higher rate compared to the GST," he said in a statement on the second anniversary of the GST’s implementation.

Nevertheless, Lau said the GST has yielded many benefits, such as a boost in government revenue, which in turn, is channelled back to the people.

He said tax evasion has dropped, while input tax credits have encouraged people to pay taxes on purchases made or expenses incurred for business activities.

It is a healthy international practice which is effective and transparent, and overcomes the weaknesses in the previous system, such as double taxation, he added.