PETALING JAYA, 30 Dec: The Deputy Finance Minister, Datuk Ahmad Maslan, has been reminded to not confuse the people with allegations that the implementation of the Goods and Services Tax (GST) will cause prices of goods and services to be lower.
Instead, manufacturers and vendors will be forced to take steps to reduce their labour force if they wish to retain the price of goods when the GST is implemented.
The move need to be taken to reduce costs to offset the increase in various business costs such as petrol, electricity, other raw materials and the GST charged.
The Parti Keadilan Rakyat (PKR) Strategy Director, Rafizi Ramli, said that vendors that do not raise the price of goods or services, and at the same time need to cope with the increased costs, will bring them losses and they would eventually have to shut down their businesses.
“Once the GST is implemented, the overall price of goods will increase. This means that the cost incurred by vendors, whether it is the cost of raw materials or other business costs, will also increase and reduce profits.
“In this situation, vendors have no other choice but to increase prices to ensure profits remain the same when the GST is introduced or to reduce their workforce,” he said in a press conference at the PKR Headquarters today.
Explaining further, Rafizi, who is also the Member of Parliament for Pandan, said that although vendors claim the GST paid for purchases and business costs, it will not be enough to cover the increased business cost due to the overall increase in price.
“This stems from his (Ahmad) understanding that ‘supposedly’, when vendors charge the GST, they will recover the GST paid on purchases and business costs through the input tax,” he said.
Rafizi said that Ahmad did not take into account that vendors will also need to pay for raw materials and other business costs which are higher due to the GST and the increased production cost incurred by their suppliers.
