Lies, damned lies, and statistics.

source : GSTINFO

We read the comments by Penang Institute’s Dr. Lim Kim Hwa and Ooi Pei Qi on the recently announced GST with some interest (http://www.freemalaysiatoday.com/category/nation/2013/10/26/think-tank-gst-is-an-additional-tax/).

According to them: “Our analysis shows that GST is a regressive tax where lower income

households will bear a higher tax burden than higher income households.”

They went on to give examples of how this is calculated from their 24,768-strong survey group.

Their study showed that households earning RM2,500 a month would have to bear an additional 2.67% of their income towards GST while households earning RM605 a month would pay an additional 2.35%.

The rich on the other hand, those with a monthly household income of RM30,815, would only pay a mere 1.32% in additional taxes a month.

Let’s examine this for a moment:

RM605 x 2.35% = RM15*
RM2,500 x 2.67% = RM67*
RM30,815 x 1.32% = RM407
*All values rounded up

How do the rich end up paying less? They pay less as a percentage of their earnings – of course, they make more. It doesn’t mean that through GST the poor are going to pay exorbitantly more. In fact, it could all even out (read our take on this here à http://goo.gl/cPxEsY).  

The poor people in question here probably don’t even know that they’re already being taxed by businesses thanks to the effect of cascading and compounding tax found in the current SST system. For all we know, they’re paying more than 3%.

We see a fixation with the notion that poor people will suffer because of the GST. But rather than stand against a taxation system that most of the world would attest to being the right way forward, why not look instead at how we can help the poor increase their income? After all, aren’t we all working towards becoming a high income nation? Is their income supposed to remain the same forever?

Instead of focus on a slight adjustment in taxes, look at how we can help the poor increase their income so they can earn an additional RM100 (and more) every month to compensate for any tax adjustments.

It’s time us Malaysians focused on making better people of ourselves, add value to what we can offer, and work hard towards becoming that high income nation that we so crave for. Look at the bigger picture.

Sorry, a bit emo with this one. J