The imposition of the 6% GST on 1 April 2015 will raise the price of goods. If not, then the GST will not raise any money for the government. Unless the government is asking businesses to absorb the cost of the tax, a day dream.
The GST has already raised the cost of services, namely, restaurant dining. There used to be no service charges or taxes of any kind. We gave tips. Then hotels imposed a 10% service charge, probably because Malaysians are not good in tipping. Then came the SST (Sales and Service Tax) in 1975 and hotels charged 10% service charge and 6% service tax. Eventually, this practice was taken up by restaurants outside hotels. And, of course, the 10% + 6% are imposed even on top of the cost of tea, peanuts and towels which used to be the implicit tips for the workers of restaurants.
By a series of indirect taxes, the government has successfully raised the cost of living of the ordinary people.
Now, the GST even threatens to ruin the lives of small traders.
Let it be clear that the GST now gives absolute power to the Customs Department to prosecute anyone which has not registered their businesses for GST.
(This works the same way as the Inland Revenue Board to prosecute anyone working or doing business who are not registered for income tax.)
The upshot of this is that the GST registration exercise is more akin to a census on all businesses in the country. Of course, not all businesses will register, either out of ignorance or defiance. Like the Inland Revenue Board that can charge anyone for the evasion of income tax payment, the Customs can do likewise for businesses with regard to the collection of the GST.
Non-registration, in itself, is already a crime.
Then, they can look through your books to see whether your turnover is more than half a million ringgit a year. This is where the grey area comes in. The enforcement part.
The government hopes that by the introduction of a software (hopefully it works well under all scenarios), the problem of managing the GST is only a push of the button away. Everything will process itself and magically the coffers of the government will bulge.
I am only very sorry for the thousands of small traders or businesses who used to survive quietly in oblivion who will now be living in fear of a prosecuting force that will comb through very nook and cranny for any potential unregistered GST offender or, if registered, compelled to collect the GST.
Should the GST programme fails to live up to its expectation of a revenue booster for the government, I fear the pressure to prosecute will be high.
All this because the government is too big, too inefficient, too spendthrift.
The government should not replace lost oil revenue with the GST. The government should downsize, be more efficient, and get out of business. The government should just ensure law and order and security of the nation. And take care of our children. Too much?