In fact, Finance Ministry Tax Revision Panel secretariat chairman Datuk Kamariah Hussain said prices of certain goods such as shoes and clothing could actually drop by about 2.7 per cent.
She said the rate under the GST is only four per cent compared to the five per cent and 10 per cent under the goods and sales taxes, respectively.
Explaining the concept, she said under the present taxation system, a pair of shoes made in a factory in Kuala Lumpur with a price tag of RM100 has already included the 10 per cent tax in the price.
She said other indirect cost like phone bills is also embedded in the price or in other words, passed on to the end consumers.
"But with the introduction of the GST, we have estimated that the consumer price index (CPI) could actually go down by 1.9 per cent," she said after briefing Chief Minister Datuk Musa Aman and other state leaders and senior civil servants about the GST at Magellan Sutera on Thursday.
Nevertheless, she said the prices of goods and services would not all go down because of the element of transportation costs from the peninsula to Sabah, which causes the price of goods and services in Sabah to be higher than in the peninsula.
The rate for services such as recreation, private health care and education, would increase by about two per cent.
But under the GST system, she said freight forwarding companies could claim the service tax they paid for transportation charges.
The savings they gain in turn would be passed on to the consumers.
To ensure the traders do not profit from the reduction in the costs of goods, Kamariah said the Domestic Trade and Consumer Affairs Ministry is in the midst of drafting the anti profiteering law.
"The Bill will be tabled during the March and April (parliamentary) session," she said.
Kamariah said the introduction of the GST would not affect the lower income group as certain basic foodstuff including rice, sugar, salt, flour, eggs, meat and chicken as well as the first 200 units of electricity and 35 cubic metres of water consumed were exempted.
The tax model the Ministry is using, she said, is meant to address the lower-income group.
To a question, she said the GST would not burden the higher and middle-income group as they could afford it. "At the end of the day, the GST is a more efficient and better system," she assured.
The Government could collect more revenue and carry out more development projects for the people.
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