GST will raise house prices by 6.2pc, says Redha

 
Selangor: The Real Estate and Housing Developers' Association Malaysia (Redha) expects property prices to increase by 6.2pc once the Goods and Services Tax (GST) kicks in on April 1, due to certain building materials which are taxed under the regime.

Residential properties are exempt from GST.

"94pc of the survey's respondents are very worried over the GST's impact on overall business costs", Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said during the launch of its' property industry survey results for the second half of 2014, adding that it is one of the key issues faced by the property sector presently.

He said the other equally important issues were financing for buyers, as well as challenges related to utility service providers and local authorities.

Among other examples indicating how serious things were, Iskandar said launches of residential and commercial units for the second half of 2014 dropped by 62.9pc and 81.6pc respectively, in contrast to the figures seen in the first half.

"Most distressing are first-time buyers wanting but (being) unable to purchase affordable housing," noting that from 2013 to 2014, loan rejections over sales rose by 7pc.

Iskandar said its issues with utilities service providers were on ensuring proper access to electricity, water, and sewage for their new projects.

He also observed that slow approval processes, inconsistent policies/guidelines and high development charges from the local authorities such as town councils only served to compound matters.

"The government on a state and federal level ought to engage the private sector in addressing these issues effectively, in particular to increase the purchasing power of Malaysians," he urged.

Meanwhile, employers voiced concerns about several grey areas in the Goods and Services Tax (GST) that need to be addressed.

While saying that a deferment could help address the grey areas properly, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said: "Its better to get everything in place before the implementation so as to avoid employers having to face penalties on the new tax system."

"The several grey areas would be the items being both subjected and exempted from GST, the pricing issues and the claiming process.

"For instance, if a food business purchases raw materials and processed food, then the owner must know which items to be taxed and which are not subjected to the tax," he said.

He also said that some traders will sell taxable items to their clients and absorb the costs themselves instead of charging their clients.

"At the end of the day the businesses have to absorb the service tax and also in return claim a credit on GST paid on his input," Shamsuddin said.

Emphasizing the need for proper and clearer implementation of the system, he said, not all employers are ready for it as they are still uncertain as to the requirements and if they actually fall under the registration category.

"The small businesses are the ones who are in real dilemma," he said. Shamsuddin said that there is a lot of anxiety, apprehension and tension among employers because they are uncertain about the price coding for products.

Source: Daily Express, dated 21/03/2015