Impact of GST on cost of production not the final price of goods

SHAH ALAM, 22 May: The implementation of the Goods and Services Tax (GST) will lead to price hikes that will further burden the people, who are increasingly pressed by the country’s economic condition.

The Member of Parliament for Pandan, Raifzi Ramli, said that although some basic items are not affected, as mentioned by Prime Minister Datuk Seri Najib Razak, but some items are still subject to the GST.

He said that the impact of the GST cannot be seen on the final price of a product, instead it refers to the impact on the cost of production and the cost of machines and services.


“For example, even though a restaurant sells belacan (shrimp paste) that is not imposed the GST, but the GST is charged on the rental of the shop, the electricity, and the purchase of tables. All this will increase the cost of business, which will eventually lead them to maintain their profits or continue business.

“Perhaps we will also see this in Sinar Harian because the price of newspapers may go up. The newspaper may not necessarily be charged the GST. But prices will increase for ink, machines and servicing.

“That is why I said that prices of goods will increase for countries that introduce the GST.

“Not to mention items excluded because the overall impact on the economy when the GST is imposed is that the prices of goods will rise,” he said at the ‘GST: Who Profits and Who Suffers Loss’ discourse organised by the Karangkraf Media Group.


He said that he personally has suggested to the Federal Government to introduce a tax on the wealthy that have a monopoly in the country.

“I suggested it in Parliament. I recommended it directly to the Minister of Finance, however the answer given and stated by the Deputy Minister of Finance, Datuk Ahmad Maslan, is that the tax on the rich, like the Capital Gain Tax and the Super Rich Tax, as suggested by the Pandan Member of Parliament, is not suitable to be implemented in Malaysia.

“It looks like the Federal Government only insists the implementation of tax on ordinary people,” he said.

Rafizi said that the Federal Government is introducing the GST because it is easier to collect compared to income tax because there are some who avoid paying it, and also because there are leakages in the tax collection system.

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