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Sunday, April 3, 2016

Sardine and GST

Naughty post

Once regarded as food for the poor, sardine these days command quite a high price. In fact, canned sardine of premium brand Ayam brand sardine (425g) can fetch the price of RM8.50 to RM10.50.

Introduction of GST last year saw canned food, including sardines being charged with GST of 6%.

This became a cannon-fodder for anti-GST movement as fresh lobster is not charged with GST.

Anti-GST movement used this as an evidence of an uncaring government that tax the poor (ie sardine) to feed the rich (ie lobster).

The truth is far from the accusation.

The lack of understanding the GST law made it easy to manipulate people who are not aware of the law.

Fresh lobsters are not charged with GST. As lobsters are usually sold unprocessed, it is not charged with GST. But cooked lobster at restaurants are levied with GST, which is a fact usually not shared by anti-GST campaigners.

This usually infuriates the mass who do not understand the distinction.

Sardines are usually sold processed and in canned forms. As these are processed, GST is applicable. Despite 6% GST replaced 10% SST, the price did not go down.

Fresh sardines which are sold at supermarkets and fish markets do not attract GST as these are considered as fresh supplies. At RM8.99 per kilogramme, it is far cheaper than the RM8.50 for 425g canned sardine. Yet, anti-GST campaigners do not promote this fact as it is very unfavourable to their cause.

So what is the real issue with sardine?

It is the lack of information and lack of understanding.

Knowledge is power. Understanding is key to the power. Have both, you will find way to be able to look pass the fog of war in front of you.

PS: price of goods did not go down for most goods due to the following reasons:

1. Weakening of RM/strengthening of USD post implementation of GST. These goods are usually sold in USD in the international market, which resulted in the goods to be affected by currency fluctuations.

2. Scarcity of resources. There is a research years ago on food production versus human population. Human population is expected to grow exponentially while food production is expected to grow proportionally. It means human population grows faster than food production. 

Therefore, food becomes scarce. This is worsened by fact that a very small segment of society (5%) that controls nearly 80% of global wealth.

3. Profiteering by businesses. Yes, we still have profiteering in our society. Profiteers would blame the government that the price of goods had increased. Last year, I had thought this would be resolved within 6 months. But I was wrong. With a very small enforcement team, the government needs at least another year or two. Using UK as an example, they needed 2 full years before enforcement of VAT managed to minimise both tax evasion and profiteering.

PS - as mentioned by good friend, Maurice Jerasi, thankfully the anti-GST proponents did not use cow as an example.
First published on my FB page today.

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