Tuesday, April 28, 2015

Countering the fat lies of rafizi ramli's gst video (1)

Thanks to LSS who works hard countering rafizi ramli's lies.  and shame on PMO staff who practically do nothing..

Lapiji says he has created 4 videos on GST and has published the first one here: http://tinyurl.com/klxsqa5
In this video Lapiji says Govt is wrong to say that removing Sales and Service Tax will reduce the price of all goods and saying this is a govt lie since Sales Tax only covers a limited scope of items.
He also gave an example of a watch being sold under the now abolished SST system as follows:
Importer/Manufacturer cost: RM100
Sales Tax of 10%: RM10
Wholesaler margin: RM30 (21.43% profit margin)
Retailer margin: RM50 (26.32% profit margin)
Final price to Consumer: RM190
He then calculates the price under GST system as follows:
Importer/Manufacturer cost: RM100
Wholesaler margin: RM30 (23.1% profit margin)
Retailer margin: RM50 (27.78% profit margin)
GST of 6%: RM10.80
Final price to Consumer: RM190.80
While it is laughable that Lapiji complains that the price has increased 80sen (or 0.42%) of a RM190 item under the new system, it is worth nothing that under the GST system, the profit margins of the Wholesaler and the Retailer has actually INCREASED!
The cost to wholesaler and retailer have actually dropped under GST and if booth of them maintained their previous profit margins, under the GST system, the price would actually be less at RM183.10 as follows:
RM100 + RM27.27 (21.43% margin) + RM45.45 (26.32% profit margin) + RM10.36 (GST of 6%) = RM183.10
It is very clear from Lapiji's calculation that the wholesaler/reseller costs has reduced under the GST system and their profit margins percentage have increased.
Which means that under Lapiji's example, the wholesaler and the reseller did not pass on their cost savings (less use of capital and cheaper cost price) to the resellers and hence the price have gone up 80sen!
Those who have passed on cost savings such as the car companies and Domino's Pizza and KFC and some clothing companies have indeed seen a REDUCTION of price under GST. So Lapiji, can you explain why these companies CAN reduce price while others can't?
Also, govt never said that all prices will reduce in price under GST therefore Lapiji should quit lying.
Govt has always maintained that under GST, some will reduce in price, some will increase and some remains the same. Govt (and even Maslan) has been consistent with this message.
In this example, Lapiji seems to be approving the actions of the wholesalers and retailers who increased profit margins and not pass on their savings from more efficient use of capital to the consumers.
If Lapiji and Pakatan leaders are responsible people, they should call on the traders to pass on their cost savings and educate traders that by reducing price of goods and services, their sales volume would increase and benefit all parties.
Alas, these are not responsible people and more interested in protecting traders and inciting hatred against govt.

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