GST should see fall in prices of some household goods

PETALING JAYA: While many are worried that prices of all goods will increase after the implementation of the Goods and Services Tax (GST) on April 1, this might not be the case, say experts.

Monash University Malaysia School of Business deputy head (Education) Prof Jeyapalan Kasipillai told The Star Online that the introduction of the GST did not mean that prices of all goods would rise.

In fact, Jeyapalan said the public would find that prices of some household goods would be lower than present.

He added that the price increase of certain goods would also be a one-off as traders will eventually adjust to the new business environment.

“Prices will stabilize after the GST is introduced.

“There will be a one-off spike in certain goods and services but all businesses are generally expected to adjust accordingly to the new GST environment,” he said.

KPMG Tax Services Sdn Bhd executive director Bob Kee explained that the guide published by the Government showed that prices of several household goods will be lower after the introduction of the GST, an impact of the new tax that would benefit the public.

“There will be a slight reduction of less than 2% in prices of certain everyday items,” said Kee, citing rice, bread, spices, coffee powder, green tea, soft drinks, live fish and chicken, fruits, and baby milk powder as being among the items most consumed by Malaysians.

He added that the country’s GST rate was the lowest in the region.

“Presently, Thailand and Singapore’s GST/value-added-tax (VAT) rate is 7%, Indonesia and Vietnam is 10% and the Philippines at 12%.

“So, it shows that the Government does not want to burden the public,” he said.

Malaysia University of Science and Technology's School of Business dean Dr Yeah Kim Leng said that prices of goods after the GST will depend on each item’s present sales or service tax rate.

“Individual items may see prices either falling or rising depending on the existing sales or service tax rate and the new GST rate,” said Yeah.

He, however, said some traders may use the implementation of the GST to raise prices of goods indiscriminately.

“We do not discount the possibility of traders and businesses jacking up prices more than 6% for some goods and services.

“The public should compare the pre and post GST prices in the guide issued by the Domestic Trade, Consumerism and Cooperatives Ministry and report any price increases beyond the prices stipulated in the guide,” he cautioned.