KOTA KINABALU: The 1% increase in service tax which insidiously crept into the New Year will push middle-class Sabahans lower down the economic ladder and flush the other groups already at the bottom into a new poverty pool.
“The government has conveniently deferred the GST (Goods and Services Tax) issue, but took the liberty to up the service tax by 1% as it figures that the middle and upper classes would not feel the pain,” said a teacher.
“But this was not so in Sabah. Sabah has the highest cost of living and inflation rate in the whole federation.
“If the official inflation rate is 2%, in Sabah it is at least twice or thrice that unrealistic figure thanks to incompetent policies.
“The middle class is slipping into lower middle class who are (in turn) going down further due to increasing real estate pricing and cost of maintaining the same standard of living,” he said.
The quiet increase from 5% to 6% of the service tax, which was overshadowed by the federal government’s announcement of a 10 sen hike in RON97 fuel and kerosene, has somehow manged to slip past the opposition gaze.
“KL promised a 4% GST last time and now it is 6%… what is happening here?” asked Anthony Gunsalan, a retiree.
Gunasalan is not alone in venting his frustration on Malaysia’s fiscal policy.
Motorists lining up to renew their vehicle comprehensive insurance policies with a premium of RM1,000 now have to pay an increased service tax of RM60 instead of RM50 (as was last year).
“The extra RM10 may not be a lot for rich people or the government, but it matters to a lot of motorists on a tight budget when the prices of petrol keep increasing and the costs of spare parts and maintenance keep rising,” said Mary Shim, a mother who just sent her daughter to school.
Squeeze on business
Business establishments here are also rueing the government’s latest move to increase its coffers.
A quick poll of several business establishments here including legal firms and eateries found that on the average they contributed some RM50,000 yearly in service tax to the Customs and Excise Department.
“An increase of 1% would mean another RM10,000 from each establishment into the federal coffers…,” said a lawyer, who declined to be named.
And if 2,000 firms are contributing an extra RM10,000 in service tax, the federal government is estimated to enjoy another RM20 million, he said.
This is a very conservative figure as it is a speculative and potential income projection.
“All our clients will see a marginal increase in legal fees because of the 1% increase in service tax, but for those with multi-million ringgit transactions, 1% could mean a big difference on the bill,” explained the lawyer.
The federal government early last year passed off the GST of 4% as being lesser than the 5% service tax then levied by business establishments in Malaysia with a turnover of RM500,000 per annum.
But the rise of the service tax from 5% to 6% has gone barely noticed by the opposition despite subdued public unhappiness.
One of the problems with the GST is that it is more comprehensive covering every sale and service transaction from buying a packet of instant noodles to having the mechanic service your car.
In the context of Sabah and Sarawak, the fairness of such a fiscal policy becomes questionable.
Livelihoods sabotaged
People in Sabah and Sarawak are already paying more for goods as prices are generally higher than in the peninsula. This situation has come about due to a cabotage policy that forces shippers to transport goods from the peninsula and other countries via Port Klang to support domestic shipping firms.
For example, a Proton car in Sabah cost on average some RM3,000 more than its peninsula price. Buyers in Sabah have to cough up another RM120 under the service tax due to transport cost.
The question being asked now is: why do Malaysian citizens (and foreigners) in Sabah need to fork out RM120 when compared to Malaysians and foreigners in the peninsula?
Meanwhile, Sabahans continue to look across at Brunei which chose not to join Malaysia in 1963 and mull over their historic mistake.
Bruneians do not pay income tax, enjoy free medical and education facilities up to tertiary level and drive imported cars which are affordably priced.
They have only one grade of premium class petrol for sale at 55 cents per litre and the roads are superb and well maintained.
“The government has conveniently deferred the GST (Goods and Services Tax) issue, but took the liberty to up the service tax by 1% as it figures that the middle and upper classes would not feel the pain,” said a teacher.
“But this was not so in Sabah. Sabah has the highest cost of living and inflation rate in the whole federation.
“If the official inflation rate is 2%, in Sabah it is at least twice or thrice that unrealistic figure thanks to incompetent policies.
“The middle class is slipping into lower middle class who are (in turn) going down further due to increasing real estate pricing and cost of maintaining the same standard of living,” he said.
The quiet increase from 5% to 6% of the service tax, which was overshadowed by the federal government’s announcement of a 10 sen hike in RON97 fuel and kerosene, has somehow manged to slip past the opposition gaze.
“KL promised a 4% GST last time and now it is 6%… what is happening here?” asked Anthony Gunsalan, a retiree.
Gunasalan is not alone in venting his frustration on Malaysia’s fiscal policy.
Motorists lining up to renew their vehicle comprehensive insurance policies with a premium of RM1,000 now have to pay an increased service tax of RM60 instead of RM50 (as was last year).
“The extra RM10 may not be a lot for rich people or the government, but it matters to a lot of motorists on a tight budget when the prices of petrol keep increasing and the costs of spare parts and maintenance keep rising,” said Mary Shim, a mother who just sent her daughter to school.
Squeeze on business
Business establishments here are also rueing the government’s latest move to increase its coffers.
A quick poll of several business establishments here including legal firms and eateries found that on the average they contributed some RM50,000 yearly in service tax to the Customs and Excise Department.
“An increase of 1% would mean another RM10,000 from each establishment into the federal coffers…,” said a lawyer, who declined to be named.
And if 2,000 firms are contributing an extra RM10,000 in service tax, the federal government is estimated to enjoy another RM20 million, he said.
This is a very conservative figure as it is a speculative and potential income projection.
“All our clients will see a marginal increase in legal fees because of the 1% increase in service tax, but for those with multi-million ringgit transactions, 1% could mean a big difference on the bill,” explained the lawyer.
The federal government early last year passed off the GST of 4% as being lesser than the 5% service tax then levied by business establishments in Malaysia with a turnover of RM500,000 per annum.
But the rise of the service tax from 5% to 6% has gone barely noticed by the opposition despite subdued public unhappiness.
One of the problems with the GST is that it is more comprehensive covering every sale and service transaction from buying a packet of instant noodles to having the mechanic service your car.
In the context of Sabah and Sarawak, the fairness of such a fiscal policy becomes questionable.
Livelihoods sabotaged
People in Sabah and Sarawak are already paying more for goods as prices are generally higher than in the peninsula. This situation has come about due to a cabotage policy that forces shippers to transport goods from the peninsula and other countries via Port Klang to support domestic shipping firms.
For example, a Proton car in Sabah cost on average some RM3,000 more than its peninsula price. Buyers in Sabah have to cough up another RM120 under the service tax due to transport cost.
The question being asked now is: why do Malaysian citizens (and foreigners) in Sabah need to fork out RM120 when compared to Malaysians and foreigners in the peninsula?
Meanwhile, Sabahans continue to look across at Brunei which chose not to join Malaysia in 1963 and mull over their historic mistake.
Bruneians do not pay income tax, enjoy free medical and education facilities up to tertiary level and drive imported cars which are affordably priced.
They have only one grade of premium class petrol for sale at 55 cents per litre and the roads are superb and well maintained.
UMNO@BN is rotten to the core. Sabahans must vote them out from our beloved state before it is too late.
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