PERAK Bar chairman Kenny Lai is married with a 19-month-old daughter and a second child on the way.
Like most young parents who cannot avoid spending large amounts of money on essentials such as formula milk, diapers, childcare bills and medical bills, he is concerned that the implementation of the Goods and Services Tax (GST) come April 1 will further add to his already long list of expenditures.
In this question-and-answer series, The Star spoke to the 39-year-old about his take on the GST and his concerns for the future.
Q: What do you know about the GST?
A: I have had a couple of briefings by the accountants and also by members of the tax division in Bar Council regarding GST. I would say I know what GST is but not the full workings of it yet. I, however, think that the tax should be named Value Added Tax as GST confuses people.
Q: How do you think it will affect you as a young father?
A: I think that despite what has been told, most goods will increase for us end users. We, the end users, will always suffer the brunt of the increase in any tax.
Q: What are your worries?
A: As a lawyer running my own practice, my main worries are the enforcement of such laws. There are no options for genuine mistakes. Penalties are hard and heavy. As a father, I am worried there will be a significant price increase in all goods.
Q: Do you think businesses will take advantage of the GST to hike up the price of goods and services?
A: I think all businesses would take advantage of it. Much like the increase in petrol prices. Everyone increased prices. When the petrol price went down, no one lowered prices . Businesses will definitely raise prices and cite GST as the main cause although I believe they should not do so. In that sense, maybe the government needs to look at enforcement of these tax laws properly.
Q: With the cost of living on the rise and now GST, how will it affect your family expenditure?
A: Simply put, we have to cut down on luxuries and only go for essential items.
Q: How do you intend to counter the effects?
A: I think I would have to try to be a smarter shopper in order to stretch the ringgit further.
Q: Do you think a lifestyle change will do any good?
A: Well, I think a lifestyle change will help a little bit but I don’t know if it will be any good in the long term. Most of the spending we do now is for essential items anyway.
Q: Will the implementation of the GST put a dent in your planning for the future? For example, will it affect what sort of school or university you will send your child to or the number of holidays you will take from now on?
A: I do not know the full effect of the GST. At best, I can only take a guess. But if school fees are going to be taxable or price of books and cost of living will increase, then it will definitely affect the preparations we have in place for my children’s education. I would think that the number of holidays would also decrease as we would have to put aside more for their education.
Q: How do you think the Government should help young families with the GST in place?
A: I would suggest that with the implementation of GST, the personal tax for middle-income earners could be reduced. There should also be more zero-rated tax products instead of those that are tax-exempted so as to avoid the rakyat from being taxed unnecessarily. At the end of the day, if something is exempted from the GST, then it is the rakyat who has to absorb the costs. Private healthcare services, private education, public transport services and financial services should be zero-rated and not tax-exempted.
Q: In general, do you think the GST will benefit the people?
A: I do hope that in the long term GST would be helpful to us in the sense that the monies collected from this tax are channelled to areas like education or road maintenance and not wasted on unnecessary projects or to bail out failing government-linked companies. Monies that taxpayers pay, both under GST and from our income tax, should be used properly. Maybe then, education for our children could be totally free.