‘Goodies’ not enough to offset rising living costs, say consumer groups

Despite more cash handouts, lower income tax and a multitude of items exempt from the goods and services tax (GST), consumer groups said Budget 2015 was not enough to offset rising living costs for Malaysians.

Federation of Malaysian Consumers Association (Fomca) CEO Datuk Paul Selvaraj said consumers would still had to pay a premium for housing as well as petrol because of the lack of public transport.

He also said the lack of government enforcement would give rise to profiteering once the GST was implemented April next year at a rate of 6%.

“It looks like the government has taken certain measures to minimise the impact of GST, many are zero-rated, while there is no tax on petrol.

“But our concern is profiteering. I am concerned that sellers will take advantage of the GST and increase the actual price, so zero-rated items will be sold at inflated prices,” Selvaraj told The Malaysian Insider.

“We feel that all items should be labelled – what is zero-rated and what is taxed. The government should also set up a hotline for consumers to turn to if they are unhappy with their purchase.”

Prime Minister Datuk Seri Najib Razak announced yesterday when tabling the budget that the GST was expected to raise RM23.2 billion in revenue. But RM3.8 billion in zero-rated goods would be deducted from this amount.

Selvaraj also said that despite petrol prices having gone up from last week’s subsidy cut, the government did not address alternatives for the rakyat to wean them off their fuel dependency.

On October 2, the government reduced the fuel subsidy of the RON95 petrol and diesel by 20 sen. Petrol now costs RM2.30 a litre compared with RM2.10, while diesel costs RM2.20 compared with RM2 previously.

“The bus system is not being addressed, and it’s to the point that there is no choice for the ordinary people except to rely on their cars to commute.”

Another issue for the average consumers, said Selvaraj, was housing, with homes either being beyond their means or located too far from the city centre that they would have to pay a premium on petrol for their daily commute.

“There have been many efforts to create affordable housing, but the government hasn’t done enough to make it difficult for speculators to enter the market. The market should have stronger regulators.”

Consumers Association of Penang (CAP) president S.M. Mohamed Idris said he was sceptical that prices would go down once the GST was implemented, despite the long list of exempted items, including RON95 petrol, diesel, noodles, coffee and tea.

“Even if those are exempt, input cost will go up. Transport cost, the cost of raw materials… in the end, you will still pay more,” he told The Malaysian Insider.

“CAP has never agreed with the GST because we say it’s a regressive tax. They should have implemented the more progressive inheritance tax.”

Mohamed also shrugged off the government’s decision to lower income tax by one to three percentage points, noting that this would not benefit the lower-income groups who did not make enough to qualify for income tax.

“We’re talking about only rich consumers benefitting from this. Can you imagine how many millionaires will now be taxed even less? They should have introduced different income tax rates instead.”

He added that the government made a mistake in not implementing the sin tax, noting the economic and social costs alcohol and cigarette consumption had on Malaysians.

“The BR1M is not likely to offset extra costs. I don’t think anyone has done any research on how effective it is for the people. It’s just one-off,” he added, referring to the 1Malaysia People’s Aid cash vouchers.

Najib announced yesterday that BR1M for the lower-income group would be raised from RM650 to RM950 next year, while households earning between RM3,000 and RM4,000 a month would now receive RM750.

Single people aged 21 and above and not earning more than RM2,000 a month are entitled to BR1M worth RM350, an increase of RM50, said Najib.

Datuk Nadzim Johan, an activist from the Malaysian Muslim Consumers Association, said BR1M should not be permanent.

“Our people are not able to appreciate it and we are afraid that it may not be used effectively. It is a liability,” he said.

Unlike the other consumer groups, Nadzim said the budget was too consumer-friendly to the point that it was counterproductive.

“For example, about 1,000 products are exempted from the GST, it’s almost like most products are not taxed. I also think the margin between the present tax and the new tax is too small.

“All in all, I feel that the budget is too soft and Malaysians can’t appreciate it. There shouldn’t be anything for consumers to complain about.” – October 11, 2014.