The impact of GST on non-government retirees — Saleh Mohammed

MAY 12 — The Lembaga Hasil Dalam Negeri website shows a taxable person being an individual (with effect year 2015) who earns an annual employment income of RM34,000 (after EPF deduction) has to register a tax file.

Jabatan Kastam Diraja Malaysia explains GST is a multi-stage consumption tax on goods and services. It also said we need to pay taxes so that the government can finance socio-economic development; which includes providing infrastructure, education, welfare, healthcare, national security etc.

On one hand, we do not have to pay tax if our annual employment income is below RM34,000 (after EPF deduction) but we have to pay GST even if we are not employed or retired.

There may be more than two million retirees who have been paying GST from a year ago. Exception would be government pensioners who still receive income through pension and enjoy all the medical benefits. Without any employment income, non-government retirees (NGR) have to pay this thing called GST which is devouring our hard-earned savings. GST by nature is designed to tax those who cannot afford to be taxed in the first place.

During our working days, we also contributed to nation building and paid so much taxes (at higher rates and lesser deductions) and thought that the government of the day would look into our wellbeing after we retire. Sadly, this is not happening for NGR. Our pay was also low as confirmed by the Employees Provident Fund (EPF).

Here are some examples of the impact of GST on NGR. To transfer my money electronically out from Tabung Haji account to my current account, GST is imposed on the bank charges. Wear and tear of my old washing machine and old refrigerator calls for replacement and again I have to pay this tax. A friend who forgot to settle his water bill (outstanding for more than two months) got his water supply disconnected. The connection charge also attracts GST. It is like ‘sudah jatuh ditimpa tangga’. There are more examples, like insurances renewal, better quality bread, electricity, etc but let me stop here.

The PM had promised the goal for 2016 is to be a safer, more prosperous and equal society. He also said, “The wellbeing and advancement of our people is always in our minds when we set policy”.

Given our case as NGR, it is difficult to reconcile the statements made by the PM.

The Future of Retirement Report by HSBC produced early last year shows living inheritance is a cause for concern for retirees in Malaysia where 63 per cent of retirees are worried about not being able to support family or friends financially. This is the highest percentage for this type of concern in the world.

54 per cent of Malaysians are also concerned of being reliant on family or friends for financial support Despite no longer being in paid employment, it said 86 per cent of Malaysian retirees would continue to provide regular financial support to at least one family member (including a spouse). The report findings were based on an online survey of more than 16,000 people in 15 countries, conducted by Ipsos Mori in August and September 2014

This is somewhat supported by EPF. It was reported in March 2015 (before GST implementation), EPF says that nearly 80 per cent of workers who will turn 55 this year will not have enough savings in their account to live above the poverty line. The reason for this is that most of them were on low wages when they started contributing to the fund in 1980s, and continued earning relatively low salaries till they turned 55.

At age 60, the nation’s official retirement age, Malaysians may well find themselves with no assets left, but with roughly 20 more years to live, according to International Pensions calculations. With an average life expectancy of 75 years, the Malaysian population is expected to experience health problems in the last 8 to 10 years of their lives.

Can we say BR1M would assist us for this increase in costs? If we look at the purpose of BR1M scheme, it was to offer some assistance to households that fall into the low-income group, in order to combat the rising cost of living. GST was not there when BR1M was introduced and it is a new and specific additional cost item.

Take the case of Singaporeans, they have GST Voucher (GSTV) benefits as well as other budget benefits such as the 5-Year Medisave top-up and the Service and Conservancy Charges (S&CC) rebates for eligible citizens. In addition, there is a GSTV – Seniors’ Bonus for the many older Singaporeans to help them with their daily expenses. This comes on top of the GSTV – Cash.

During the budget speech in October 2015, the PM said the Government had collected RM39 billion in revenue so far from implementing GST, compared to the predicted RM18 billion which would have been collected if the Sales and Services Tax (SST) had been retained. In January 2016, he said the collection to date amounts to RM51 billion.

Since GST is the saviour of the people, I wish to propose a department or a ‘Bahagian’ to be established to look after the wellbeing of NGR just as the Bahagian Pasca Perkhidmatan (PENCEN) looks after government retirees.

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