Current Affairs

Petrol should be a zero rated product under GST

Media Statement by Chong Zhemin, DAP Perak Economic Development Bureau Chief and Political Secretary to the Taiping MP

petrol malaysia7According to a news report in Sin Chew Jit Poh, The Malaysian Customs Department revealed in a GST forum that petrol will not be exempted from GST.

Petrol is a government subsidized product, imposing GST on petrol is akin to removing subsidy on petrol thereby burdening the people.

The subsidized price of RON95 is RM2.10 per liter, imposing GST on RON95 will raise the price to RM2.23 per liter and this is no different from removing 13 cents per liter of petrol subsidy.

I urge Najib to review the decision to impose GST on Petrol, and list petrol as a zero rated product under GST to avoid increasing the burden of the people.

In an interview, Senior Assistant Director of the Royal Malaysian Customs Department Isa Daud also said that Malaysia’s GST is a progressive tax rather than a regressive tax.

This is not only a misleading statement from Isa Daud but a desperate attempt from him to justify the implementation of GST. There is absolutely no doubt that GST is a regressive tax.

For example, a low income earner with a monthly income of RM1,000 will most likely spend all his earning, the amount of GST paid will be RM60, which is 6% of his monthly income.

On the other hand, a high-income earner with a monthly income of RM6,000 will be able to save most of his income. Assuming he save RM3,000 and spend RM3,000, the amount of GST paid will be RM180 which is 3% of his monthly income.

While the government has listed some of the basic necessities as zero-rated item, it is unlikely that low-income earners will only consume zero-rate supplies. In comparison to high income earners who can afford to save part of their income, low income earners will pay a higher proportion of GST.

This proves that GST is a regressive tax which place a higher burden on the lower income group.

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