Why you shouldn't trust everything you read in the news

A week ago I was reading an article on The Star Online, titled "Winners and Losers of SST" which I found to be a slightly technical and interesting read. The journalist quoted chief executive officer of Tax Advisory and Management Services Yong Poh Chye, an experienced tax consultant. Here, he compares SST to GST.

“For example, a box of flavoured drinks worth RM100 is being taxed at 10% and the manufacturer would garner RM10, while under GST, the same goods could garner RM12 because of the multi-layer tax system pass-through via the manufacturer, wholesalers, and retailers,” he explained.

This is a paragraph I took directly from The Star Online, link as follows: https://www.thestar.com.my/business/business-news/2018/08/27/winners-and-losers-of-sst/

Technically, he isn't wrong. Under the assumption that the tax pass-through non-registered parties before reaching the consumer. Retailers who are non-registered would actually be seen as consumers, and would be paying the RM6 in GST to the wholesaler, who would then remit to Customs.

So if the retailer's margin remains the same, they would have to cost this RM6 into their selling price. But this would make his overall selling price higher than that of a registered retailer. But if the retailers were registered the tax on those same goods would be RM6. The point I'm getting at is one could be easily misled if one was not knowledgeable on the subject. This really well done graphic from www.comparehero.my illustrates my point.

In this scenario, a consumer would choose to purchase from registered retailers as they would be better priced. So to remain competitive, the retailer would have to register(and also gain the advantage of claiming input tax credits, as shown above). The GST system is one used in many countries and has been proven to be effective. I see politicians and news articles shitting on it, and I have not a clue as to why. Do some parties have another agenda? Somehow making SST look better than GST, would make the general population feel better about the whole thing. In actual fact, we're being forced into a system of tax that is detrimental to the businesses which barely exceed the stipulated sales threshold, and with a shorter collection period. Promises were made that GST would be abolished and they were kept. But the fact that a large amount of the GST collected(legal tax dollars paid by registered companies) was missing as reported by our Finance minister, is far more troubling.

What difference does it make to each of us, really? Both systems collect tax, it used to be GST and now it is SST. One is a lot less complicated, although it collects more. Does it matter though? And the answer is no, it does not because it is the law and must be complied with, until lawmakers decide otherwise. But it's good to see that they are taking a softer approach, they've raised the sales threshold for restaurants to RM1,500,000. I also predict the healthcare industry to grow in the coming year as most of their services are exempt. Let the country's coffers get filled, let's just hope proper controls are put in place so it doesn't go missing again.

The point I'm trying to make is sometimes the news might frame something a certain a way to suit their own agenda or fit an angle. Not trying to blame or diss anyone, but I'm just saying don't believe everything you read.