The
main issues concerning about the implementation of GST is the costs
of the goods will increase which will burden the people in the
country. Although the government claim that the implementation of GST
will not hurt the businesses and people as the tax paid on the inputs
at the previous stage is claimable or deductible, overall the the
cost of goods will still increase as the producers-pass the full
value added to the end consumers at the final stage. Consequently, there might have inflation effect since the GST is applied to the prices of all goods, at every stages which result in inflation as the general products prices may go up and the hyperinflation might occur from the continuously of inflation.
There
might have continuously effect from the products prices go up. The
demand of the market might substantially decrease due to the limited
purchasing power of households. Many people argue against the GST is
that the people would not have the ability to pay for it as the high
cost of living can not be met by their current income needs and GST
would unduly burden the low income working group. Due to the
increased products prices and high cost of living, people may not
willing to spend so much as their limited purchasing power and the
market demand will substantially affected.
Although the government
claim that the GST would not hurt businesses due to GST claimable
practice, in fact it will hurt the businesses too. This is because of
the low demand in the market due to the high cost of product pass to
the end consumers, the businesses have to decrease the supply to meet
the current condition of lower demand, thus the businesses have to
cut down the expenses such as labor cost due to the lower output
needed and eventually there might occur high rate of unemployment.
Besides, the businesses is not producing in the efficient conditions
as they are not maximizing the usage of the machines, rental and etc
and all these will lead them to downsize their businesses and
eventually lead to the recessions in a country.
In
addition, GST is a new form of broad-based tax that will impact the
majority of Malaysians who are not the taxpayers now. Although the
government claims that the implementation of GST would not burden the
people because the income tax rate is not increasing, in fact the GST
is increasing the burden of Malaysians who are not the taxpayers now.
This is because some people is not eligible to pay for income tax
where their income is under certain amounts, so the broad based tax
system-GST will impact on those low income workers who are not the
taxpayers now as they will have to pay for GST when they consume and
make purchases.
Many
people is worrying the rate of GST may possibly increase in the
future in order to increase for the government revenue. This is
because many countries have increased the rate of GST after its
inception. People expectation and estimation on the increasing rate
of GST in the future will lower the public consumptions as they are
unwilling to spend more on the goods and instead they are making
more saving. The starting rate of GST is lower than the sales and
service tax, however people is worrying the GST rate may even higher
than the current sales and services tax in the future.
Moreover,
some people is arguing that the GST should not be implemented as the
introduction of GST might lead to higher debt level of the country as
other countries occurs such as Greece and Italy. Therefore, GST has
not helped in the development of the country and its would not help
in reducing the country's debt level. Besides, the proposed
implementation GST is to enhance the efficiency and effectiveness of
the existing tax system, however its might hard to comply with its as
it involving complex accounting system and required proper audit
systems too. Lastly, people is worrying that the redistribution of
increased tax revenue might not be achieved or unfairly. Perhaps
implementing GST will force consumers to spend less and more careful
in the retail choices as people are fear of the unexpected inflation
and consequences result from the implementation of GST.
