Months after GST, families feeling the pinch ask ‘what’s in it for us?’

The effects of the consumption tax are felt not only in the heavily-industrialised central region, but in urban centres across the country where prices of goods are usually more balanced.
The effects of the consumption tax are felt not only in the heavily-industrialised central region, but in urban centres across the country where prices of goods are usually more balanced.

KUALA LUMPUR, Aug 17 — Four months after the Goods and Services Tax (GST) rolled out, Malaysians are wondering how it will improve their lives and how Putrajaya will spend the millions in collected revenue from the broad-based consumption tax.

Despite Putrajaya’s assurance that the GST is a better tax system, families are lamenting the inevitable price increases, painting a sharp contrast between policy and reality in some cases.

For taxi driver Mohd Zawawi Ahamad, 56, desperation to cope with the increased expenses has seen him working longer hours even as he shaved his family’s Hari Raya spending amid dampened festivities and opted for cheaper products and budget outlets like Mydin hypermarket.

“If you ask anybody, what we can do is just compromise on so many things. People are adjusting like me, but the burden is still there. I have cut down so much, even my off days which are every Saturdays. I work 16 to 18 hours everyday driving my cab.

“We can’t run away from it. We just have to adjust, but the truth is we still suffer,” the father of three living in a People’s Housing Project flat in Kepong Utara told Malay Mail Online.

He related that his two older children even took on jobs to help chip in to buy their youngest brother new clothes for Raya.

Zawawi said his food expenditure rose by 30 per cent, while maintenance and spare parts prices for his taxi has jumped by 40 per cent, with the cheapest tyre in the market costing him RM140 now instead of RM100.

But beyond the concerns on his monthly expenses, Zawawi also wants to know how the GST benefits “working-class” Malaysians.

“What I want to know is where does the money go to and how does it come back to working-class people like me? I really want to know. From what I read and comprehend, this (GST) is just to pay off the bad debts the government has accumulated… nothing for the people,” he said.

Food ingredients in Rawang used to be cheaper than many other districts in Selangor, according to resident S. Renumathi, but has now shot to around RM30 for a kilogramme of chicken or fish, forcing her to raise her catering fees to avoid losses.

“I don’t feel I am getting anything back from GST, nor has it made life easier for me. I just do not understand how is it that we are being told that GST would make life better. I am certainly not feeling any better,” the 65-year-old told Malay Mail Online.

Her husband R. Subramaniam said he is paying high prices for goods, despite the projected savings with the GST rate of 6 per cent on items previously taxed at 10 or 16 per cent.

“Exemptions meanwhile are being given for rich men’s items… golf clubs, lobsters? Where is the priority? In my 60 years, I have never tasted lobster once.

“Three months after GST, our pockets are getting drier… how is this making things easier? But I guess we have no other way to go about it and have to just weather yet another storm,” the 66-year-old retiree said.

The effects of the consumption tax are felt not only in the heavily-industrialised central region, but in urban centres across the country where prices of goods are usually more balanced.

Businessman Kenneth Ch’ng said he and his wife are upset with the “haphazard” implementation of GST with poor assessment and planning by Putrajaya, as well as the alleged lack of transparency on how the tax collected will be used.

“We have cut down on dining at the local restaurant, going to movies and switched to doing grocery at the local wet market but even with this measures we are experiencing approx 21% jump in total expenses. We feel that our standard of living has dropped,” the Penang suburbanite said, as he was also getting reduced income from his business following the GST roll-out.

Sabahan Slyvian Chong, 21, who said he was “unhappy” with the GST as wages remain stagnant, noted that the new tax was an added burden to those living in east Malaysia.

“GST on goods would be ok if we were not already subjected to other highly priced items such as cars and houses,” said the Sino-Kadazan who lives in a household of seven - including his parents and two siblings - in a suburb in state capital Kota Kinabalu.

“The cabotage policy here has effectively made most things in Sabah and Sarawak more expensive than Malaya,” he added, referring to the peninsula by its colonial name used by Borneo Malaysians.

Chong said his family has started buying groceries on a weekly basis instead of daily to save on petrol and cut down opportunities for unnecessary or impulse buys, besides opting for bulk purchases and cheaper products such as buying whole chickens instead of chicken parts.

His wife has also resorted to unconventional means to buy cheaper diapers for their toddler - one of the most expensive items in their monthly expenses and which they had stocked up on before GST kicked in on April 1.

“Come to think of it, my wife has been looking online for sites that sometimes has promotions for things like diapers and baby products and it ends up cheaper. For example each pack of Drypers cost us RM45 here but online you can buy 3 packs for RM104. Or some days RM72.80. It’s actually quite a difference!” he said, adding that the family tries to stick to the usual brands before GST.

But Koo, a 31-year-old professional working in the Klang Valley, believes that the GST is a positive thing.

“Even though it does impose a tax on lower income groups - which in fact is negligible and in any event covered by government handouts - it has been invaluable in raising awareness of how their taxes are being spent.

“It’s better than the alternative - increase in tax on the class of tax paying members of the community,” said the lawyer who also has a toddler, with his family cutting down on non-essential spending.

Koo’s wife also believes Malaysia needs GST, however she said consumers will have to be more conscious of their spending choices as wages have not kept up with price increases.

The first few months of the GST also saw the Malaysian ringgit’s shrinking in value and plunging to a 16-year-low at one point, while the dipping of the country’s foreign reserves by US$ 5 billion in July led to reports suggesting that Bank Negara Malaysia was using it to keep the ringgit at RM3.8 to a US dollar.

Malay Mail Online had asked these families to keep track of their monthly spending from March, before the GST rollout, and for the months after to provide a balanced comparison.

All said they buy only locally-produced goods and shop at budget outlets, but the pinch remains unmistakable even if they do not buy imported items.

Last year, Bank Negara Malaysia governor Tan Seri Dr Zeti Akhtar Aziz said prices are expected to go up temporarily as a result of GST, but also said the inflation rate expected to stabilise to around 3 per cent in 2016.

For this year, Putrajaya is targeting a collection of RM23.2 billion through the GST, with the net revenue to be RM690 million after accounting for RM4.9 billion in aid directed back to Malaysians, RM2.3 billion in tax-exempted items and RM13.8 billion in lost revenue with the sales and services tax system’s abolishment.

* Julia Chan, Opalyn Mok and Yiswaree Palansamy contributed to this story.