KUALA LUMPUR: A DAP lawmaker hit out today at Customs Department director-general Datuk Seri Khazali Ahmad for telling businesses not to increase their profit margins post-GST, saying the warning was not only unlawful but also “impossible” to administer.
Petaling Jaya Utara MP Tony Pua said Khazali’s statement also indicates the department is now panicking over the imminent spike in prices that Malaysians would have to face once the Goods and Services Tax (GST) kicks off from tomorrow, although Putrajaya has repeatedly claimed that the new tax system would actually help reduce prices.
“Datuk Seri Khazali’s warning is not only unlawful, it is conceptually ridiculous and worse, impossible to administer.
“How would the Customs officers even be able to determine the cost of the products after taking into account the shop rentals, labour cost and service quality when attempting to ‘measure’ if there has been an increase in ‘profit margin’ which is deemed punishable?” Pua said in a statement today.
Khazali had in a press conference yesterday warned that businesses must not increase profit margins for the next 15 months following the introduction of the GST.
Expecting that traders will use the new consumption tax to raise prices opportunistically, Khazali warned that those who flout the moratorium will also be penalised.
“So, for example, if their profit margin was 10 per cent, they cannot increase that for the next 18 months from January this year,” Khazali reportedly said.
Pua rubbished Khazali’s statement, however, saying that with the exception of price-controlled items, which are already zero-rated, there are no laws in Malaysia allowing the authorities to dictate how much profit a business can make.
“The director-general is spewing complete and utter nonsense when for the first time ever, we hear that the government is planning not only to control prices of certain basic goods, but now also on the ‘profit margins’ of normal goods and services,” Pua added.
In his defence of local businesses, the DAP national publicity chief pointed out that most of the smaller enterprises are forced to increase their prices beyond the stipulated six per cent imposed for GST as the cost of running their operations have also increased.
“Unless the government intends to let all these companies reimburse their cost of GST ‘upgrades’, surely they would have a right to at least recoup their operational cost which was forced upon them?” Pua asked.
He also demanded that Khazali focus on ensuring that the new consumption tax is collected efficiently and that there are no tax evasions among big companies and frauds, which are bound to cause losses for Putrajaya.
“Why should a poor makcik who operates a warong be penalised for increasing her teh tarik prices by 20 sen when tycoons operating hotels get away with charging an exorbitant RM18 for the same drink?” Pua questioned.
