Make GST a worthwhile tax initiative – Tay Tian Yan

The goods and services tax (GST) is in the go. Has it added to your burden as yet?

Many readers have responded that goods prices are higher now, and even dining at coffee shops and hawker centers are getting dearer as well.

I'm puzzled. Does that have anything to do with the GST? Or someone is trying to take advantage of the confusing situation?

I recently went with a friend to Klang for bakuteh.

To be frank, this bakuteh shop is not among the most popular ones in Klang. We had to come here because we couldn't get seats at other more famous ones in town.

It doesn't matter whether the food served was good. All I remember is that my friend struck a chat with the boss after savouring the food.

"How's business, boss?"

"Not too bad!"

"How much can you make a day?"

"It depends. For today, with the crowd not too big, it's going to be around RM2,000 I guess."

"How if the crowd is large?"

"Easily three or four thousand."

"Wow! That's a lot of money. You're rich, man!"

"It's nothing! XXX and XXX (names of competitors) can make five or six thousand a day, and up to ten thousand during the weekends."

I picked up my phone and started calculating the net worth of this bakuteh boss.
For an average daily turnover of RM3,000, let's put the profit margin at 35% after deducting the costs, the net daily profit is in excess of RM1,000, and making RM30,000 a month is within reach. How about the other much more famous and popular ones?

Any business with annual turnover more than RM500,000 will have to register for GST.

This bakuteh business, along with many hawkers and small businesses, have turnovers far exceeding this threshold, but have they registered for GST?

The problem with our old taxation system was that it was less fair and more loopholed. Many businesses that ought to pay taxes have managed to escape undetected, while many other law-abiding citizens have dutifully paid their dues.

Of course, not all businesses are tax evaders and not all of them, including many bakuteh stalls, make as much money. There are business owners who can hardly make ends meet.

That said, raising goods prices on the pretext of GST is definitely unacceptable. This is no more an issue of GST, but business ethics.

Secondly, as a more equitable taxation system, GST must be able to expand the scope of taxable subject, never like in the past when only about 1.2 million had to fufill their tax duties to support some 30 million of Malaysians.

Thanks to GST, anyone who spends will have to pay tax as well. The more you spend, the more tax you pay. Moreover, through the GST linkages, transaction details at each individual stage can be identified, thus plugging any tax-evasion loopholes.

Expanding the tax revenue base, making taxation more equitable and accountable, and employing the tax collection in right places to consolidate the government's fiscal position and grow the national economy. This will make the 6% GST all the more worthwhile. – Sin Chew Daily