Higher Income Households Pay More GST

Households earning RM2,000 and below are reportedly paying RM51.89 per month (2.59% of their earnings) in the Goods and Services Tax (GST), which was implemented on April 1, said the Finance Ministry.

They were only paying RM36.83 (1.84% of their monthly earnings) under the previous Sales and Service Tax (SST).

According to the Finance Minister Datuk Seri Najib Tun Razak, the study also showed that those earning RM8,000 paid RM290 – 4.14% of their monthly income – under the GST as compared to RM168 (2.8%) previously.

“Based on this study, it is not true to assume that the lower income group is paying more than those in the high income bracket once the GST came into place.

“In fact, those in the high income group will pay more as they spend more on goods and services imposed with GST. This shows that the GST model is progressive in nature,” he said in a reply to Oscar Ling Chai Yew (DAP-Sibu).

With the inflation rate expected to rise between 2% and 3% this year, Najib said that the Government was focusing on tackling the rising cost of living.

“In April this year, the Consumer Price Index (CPI) saw a 1.8% rise after GST compared to 0.8% the previous month. However, this rate is still under control and not all items in the basket of goods have shown a drastic increase,” he said.

Malaysia was also said to be considered a nation with manageable and moderate debt of RM596.8bil or 51% of the Gross Domestic Product (GDP), said Najib in a reply to Datuk Mohd Zaim Abu Hasan (BN-Parit).

Almost all – 97% or RM579.2bil – he said, was domestic debt while the rest, RM17.6bil, was foreign debt.

“The debts are mostly Government bonds issued domestically, 72.4% of which are held by major institutions while 27.6% are held by foreign investors,” he said.

The Prime Minister also said that the Government was committed to ensure the debt level did not beyond 55% of the GDP.

[Source]