KUALA LUMPUR: Consumers should exercise wise spending if they do not want to be burdened by the Sales and Service Tax (SST), to be enforced on Sept 1, although some basic essential items are exempted from the tax.
Federation of Malaysian Consumers Association (Fomca) deputy president Mohd Yusof Abdul Rahman said consumers should understand the SST concept and be able to differentiate it with the Goods and Services Tax (GST) that was introduced in 2015.
“Prices of certain goods maybe beyond their (consumers) expectation. Hence, they need for them to understand and know the goods that are imposed the tax and those are not,” he said when contacted by Bernama.
Mohd Yusof said the choice would be in the hands of consumers whether or not to spend as some essential items would be imposed tax, especially those categorised as luxury items.
Traders, he said, should reflect their responsibility by displaying the price of goods sold at their
“For restaurants that impose service tax, there should be a notice to inform their patrons that SST is imposed at the premises,” he added.
He also advised consumers to keep the receipts of their purchases to detect any sudden increase in prices of goods after SST.
“Keeping the purchase receipts should be made a culture to check on abuse by traders and to facilitate reports by consumers to Fomca or the Customs Department,” he added.
According to Customs director-general Datuk Seri Subromaniam Tholasy, the SST rate and the list of goods that will be exempted from the tax will be released soon.
He said the list was being finalised and would not be very much different from the one already uploaded at https://mysst.customs.gov.my.
Based on the list, essential items such as drinking water, flour, egg and several types of fish will be exempted from SST, while electrical appliances, such as washing machine and refrigerator, will have a 10 per cent SST.
Meanwhile, Finance Minister Lim Guan Eng said traders who did not register their businesses for the SST before Sept 1 would not face any action by the government if they had valid reasons.
He said the ministry was prepared to give the traders a bit of leeway, but the traders were warned not to misuse it.
The Yang di-Pertuan Agong, Sultan Muhammad V, has given his consent to implement the Sales and Services Tax (SST), paving the way for the tax to come into effect on Sept 1.
The King’s approval on Friday last week came after the Dewan Rakyat and the Dewan Negara gave their green-light on Aug 9 and Aug 20, respectively. – BERNAMA
More and more Malaysian consumers are getting into serious financial problems due to poor financial knowledge, wrong attitudes and poor financial habits leading to irresponsible financial behaviour. And yet, despite the overwhelming data, the government appears unwilling or unable to commit to a national strategic plan to address the issue. Current financial education efforts are fragmented, piecemeal, ad hoc and lacking a clear strategic direction.
Despite the so-called National Financial Blueprint 2011-2020, which seeks to build a “comprehensive and holistic approach towards consumer protection and education”, we still have a long way to go. FOMCA has been strongly advocating for a National Financial Education Strategy to ensure a systematic and strategic approach to financial education, to ensure that all consumers, especially those who need it most, will have access to financial information that would help develop responsible financial behaviour as well as make informed decisions on the increasingly complex financial products and services.
The macro and micro level data of the financial behaviour of Malaysian consumers is not encouraging. In 2016, the then Deputy Minister of Finance had reported that household debt stood at 89% of Gross Domestic Product. It had been reported that this was the highest household debt to the gross domestic product in Asia. A high level of debt increases the sensitivity to households to any shock of their incomes. Next, the level of savings of Malaysian households is low. According to the Malaysian Human Development report, 53% of Malaysian households have no financial assets while 88% of households reported zero savings. Further, income levels of Malaysian consumers are low. According to Khazanah Research Institute, for individuals, the median salary is RM1,700 per month. Further, 62% of active Employees Provident Fund (EPF) members earn less than RM2,000 while 25% of EPF members earn a monthly salary below the poverty line of RM930.
The number of consumers being declared bankrupt and those seeking assistance from the Credit Counselling and Debt Management Agency (AKPK) are also increasing. A total of 294,000 consumers have been declared bankrupt due to failure to settle their car loans, hire-purchase loans, credit card loans, personal loans, housing loans and social guarantor debts. 70% of those declared bankrupt were individuals between the ages of 35 and 45. Since the formation of AKPK in 2006, 619,000 consumers have attended AKPK’s counselling services and out of this number 195,000 have enrolled in their debt management programmes. Out of the 195,000, AKPK assisted 14,000 to fully settle their debts totalling RM593 million. According to AKPK’s statistics, the major reason faced by clients was poor financial planning.
Studies have also been conducted on the financial behaviour of young workers. In their study, the Asian Institute of Finance (AIF) found that 75% of consumers aged 20 to 33 had at least one long-term debt and 37% had more than one long-term debt. To offset this, respondents were relying on high cost borrowings that 47% were engaged in expensive credit card borrowing while 38% reported taking personal loans. FOMCA in their own study found that 47% of young workers were excessively indebted. The AIF report further indicated that 70% were living beyond their means.
The respondents in the AIF study were also not confident of their financial knowledge. Only 28% of the respondents felt confident with their financial knowledge. The report also suggested that young workers have little knowledge on how to make wise purchasing decisions.
Interestingly, the AIF study found that there was a positive correlation between financial knowledge and responsible financial behaviours. That is those with higher financial knowledge saved and invested more than those with low financial knowledge.
Another study was conducted by Universiti Putra Malaysia on young workers between the ages of 20 and 40 in five public housing areas in and around Kuala Lumpur. Most of the incomes of the respondents were below RM3,000. Their incomes were barely sufficient to cover expenses with nothing left to save. Further, some of the problems being faced by the young workers were late bill payments (88.9%), spending beyond their means (69.8%), not enough money for medicines (61.1%), lack of cash to face emergencies (58.1%), inability to pay instalments (55.7%), borrowing from family and friends (55.4%), the need to borrow to buy basic food items (48.9%) and borrowing from loan sharks (22.3%). 19.4% declared that they were facing bankruptcy procedures. There were also personal consequences because of financial problems. 72% reported being depressed, 56.6% reported that they could not concentrate on their work and 57.5% reported that they have regular arguments with their spouses.
Clearly consumers, especially young workers and young families, lack the knowledge and skills to manage their finances responsibly. Thus, FOMCA has since 2011 been advocating for stronger policy and programme initiatives towards empowering consumers through a strategic approach in financial education. In 2011, we launched the Financial Literacy Month, celebrated annually in October to create awareness among both policymakers and consumers on the importance of financial education programmes. FOMCA has also been involved in various financial education initiatives including publication of a monthly financial education bulletin, financial education programmes at pre-school, primary and secondary schools, institutions of higher learning, worker organisations, women organisations and low and middle income communities. FOMCA has also used mainstream and social media to strongly create awareness and empower consumers through financial literacy programmes.
Current approaches to financial education in Malaysia are fragmented and ad-hoc, without any clear direction. At another level, FOMCA has been strongly advocating for a National Financial Education Strategy, where we could clearly plan Malaysia’s way forward to ensure that all Malaysians, especially those in most need, have access to financial education opportunities. The National Financial Strategy would seek to undertake financial literacy programmes to assist Malaysians to develop the knowledge, skills, behaviours and attitudes to make informed decisions, manage their money day-to-day and to plan for their financial future.
FOMCA has been involved in a number of stakeholder engagements to push for financial education to be given priority as a vital national agenda. We have yet to see it being given the priority it deserves.
FOMCA sincerely hopes that the new Government places the empowerment of consumers as a key national agenda. Failing which, we fear even more Malaysians would get into serious financial problems not only affecting themselves but their families, the community and the nation. Both at the macro level and micro level, Malaysia needs consumers who effectively manage their consumption and their finances responsibly to enhance both personal and community well-being.
Professor Dr Marimuthu Nadason is the president of FOMCA.
KUALA LUMPUR: Consumer groups have urged the government to exclude services used by the people on a daily basis from the Services Tax, as they fear that it could lead to higher cost of living.
Federation of Malaysian Consumers Association (FOMCA) deputy president, Mohd Yusof Abdul Rahman, said services which cover daily necessities such as food should not be taxed.
“Take food trucks, for example. If these are taxed too, it will indirectly lead to higher food prices. The people will feel the effects.
“This is a major concern among many as cost of living is a subject close to the people’s hearts. In fact, Pakatan Harapan (PH) had before this pledged to tackle cost of living so that it doesn’t burden the people,” he said.
Mohd Yusof said the government need to review the list of taxable services as it could have a direct impact on the people.
Pertubuhan Mesra Pengguna Malaysia (PMPM) deputy president, Azlin Othman, shared the same view and urged the government to review the list of taxable services.
“Even though the GST (Goods and Services Tax) is now zero-rated, the prices of goods including food have yet to go down. My concern is that if they are not exempted, the prices of goods will continue to rise,” she said.
She said if the government is keen on implementing the tax, then tax on services used by the people daily should be reduced to one per cent, as opposed to the proposed six per cent.
“The Domestic Trade and Consumer Affairs Ministry should also play a more serious role in monitoring traders to ensure that they do not take advantage of the situation to the extent that it burdens the people,” she said.
Finance Minister Lim Guan Eng, in tabling the Services Tax 2018 bill for its second reading in the Dewan Rakyat on Wednesday, said services which would undergo improvements and tax unformity measures include restaurants which also encompass catering, takeaways, food trucks and others.
However, such businesses would only be taxed if they generate annual sales of RM1 million.
“E-wastes” are broken, non-working or obsolete electric and electronic appliance.
Electrical and electronic waste is growing exponentially worldwide because of tremendous growth of demands and a high obsolescence rate on the use of electrical and electronic equipment. Globally, 50 million metric tons of e-waste is estimated to be generated in 2018 (Baldé C.P. et al, 2015). Meanwhile, based on the projection made by Ministry of Environment Japan (MOEJ) the total amount discarded E-waste will be increased by an average of 14% annually in Malaysia, and by the year 2020, a total of 1.17 billion units or 21.38 million tons of E-waste will be generated.
As reported by WHO, the total amount of e-waste produced is exponentially increasing because of multiple and interlinked factors which are development, technology, human mentality and population. Apart from that, one of the major factor of growing e-waste problem is the short lifespan of most electronic products which is less than
PETALING JAYA: The Federation of Malaysian Consumer Associations (Fomca) has said the government should reveal the mechanism used to control the prices of basic items.
Fomca chief executive officer Paul Selvaraj said the public wants to know how the government sets the prices for controlled item such as petroleum.
“The prices should reflect what the consumers are paying. Because when oil prices go up, other prices go up too.
“In contrast, when the prices go down, other prices do not decrease and we are concerned about that,” he told reporters after attending an event at Eastin Hotel here.
Paul said that the government should also make full use of the Anti-Profiteering Act to crack down on traders who take advantage and raise prices when prices for basic items go up.
“People use the oil price increase as an excuse to sell their items at higher prices.
“We should use the law to make sure prices of food and others reflect the fluctuations in the price of petroleum,” he said.
Paul also said the Malaysia Competition Commission (MyCC) should also step in to check if the consumer is paying the “right” price for sugar.
“If the world price of sugar goes down, then definitely the price here should go down,” he said, responding to a question on Petaling Jaya Utara MP Tony Pua’s statement claiming that the government had allowed Malaysia’s sugar duopoly to make super-profits over the past two years.
Pua had questioned the government for not reducing the price of sugar when the world raw sugar price dropped.
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