Zero-rated Labuan not now anymore

LABUAN - When the broad-based six per cent Government Service Tax (GST) was announced, consumers here found relief that Labuan as a duty-free island would be zero-rated.

But after a few weeks into its implementation, the relief has been replaced by grief.

Even items such as Astro, telcos and electricity, among others which in the past attracted no tax, are now GST payable here.

"So where is Labuan's benefit as a zero-rated zone. The island's duty-free status seems to offer no protection against the new tax," observed Fauziah Datuk Din, the Chairman of Labuan Consumer Council.

She said a small population of the working population were in the oil and gas sector were getting high pay and will not feel the pinch from the new phenomenon, while the majority of them in the low and mid-level are wounded with the increasing difficult times for them to make ends meet.

"Scaring the retailers or distributors with reminders on the Price Control and Anti-Profiteering Act 2011 does not seem to be effective. Actions need to be taken and only action from the Ministry officials could help consumers," added Fauziah.

She said recently, tobacco companies which are already raking in millions of ringgit in profit, has raised the price of per pack of cigarettes before GST by 17 per cent or RM1.20 per pack, without even giving any reasons and the ministry seems helpless in dealing with the matter."

Fauziah said "such steep unexplained jump in retail price sets a trend for other businesses to follow. Even small-time cookie sellers have upped their prices and popiah which used to cost RM1 for three rolls have been reduced to two rolls and some Malay cakes which cost RM1, now cost RM1.10. It seems that whether those are affected or not, have all jumped into the GST charging bandwagon."

Fauziah said that the ministry had a huge challenge in hand and suggested it come out with a comprehensive list of items in Labuan that are GST-free so that customers would be guided and would not feel fleeced.

She suggested that Astro, telecommunications, RON 97 should be GST-free and some companies doing well should absorb the GST instead of passing it to customers.

She said nobody knows who were paying GST for their imports and who were not "but everyone seem to include the item in the sale."

On transportation of goods to Labuan, Fauziah said that she had been informed that though marine transportation was GST-free, goods sent via containers here had GST applied for the fuel surcharge and containers.

These were paid by Customs agents but later passed down to consumers and commercial vehicles carrying items on the ro-ro ferries from KK are also claiming GST from the Labuan consignees.

"In many cases, the buyers are small traders who neither have the software or could afford the extra staff to handle the GST, so the safer route for such traders was to pass the paid GST to customers rather than claiming it.

Fauziah urged the Ministry of Domestic Trade to look into this issue and whether it was possible that the lorry companies claimed the GST for goods shipped to Labuan and not the consignees.

Regarding the 10 per cent service tax by hotels and restaurants, Fauziah said that the Ministry should come up with a solution.

She said suggestions that the customers could choose not to pay the service tax if they are unhappy with the service was not a solution as it would lead to quarrels "and no customers would like to make a scene in the restaurants.