What is the really big deal about GST? (in the foodie world)
Recently, our dear Prime Minister sneaked a paragraph in the budget speech about the dreaded GST.
Newspapers columns complained and complained. What? Service tax, service charge and now GST?
Matter of fact, i was listening to BFM and the interviewer asked, how would GST affect your business? (the interviewee was the MD of ChasWood Resources, operator of TGIF, Italiannies, Laundry and etc etc)
It is apparent even the interviewers have the lack of knowledge of GST (imagine the man on the streets!) because one would know what the obvious answer, if they had a clue what GST is all about.
So just in case, any readers out there wanting to carry a banner around the street telling people how bad GST is because it might increase the prices of food, think twice after you read on.
The current situation
In our restaurant bill, the components are as follows:
Food - RM XX
Service tax (5%, if restaurant income more than RM3 million) - RM XX
Service charge (10% appears to be the industry norm) - RM XX
Total - RM XXX
Now, service tax is the "tax" that the restaurants collect and pay the government.
Now, service charge goes into the pockets of the restaurants and if they are generous, they fork out some for their staff.
Come, GST..(which replaces Service Tax, dear interviewer, just in case you didn't know you made a blunder on radio)
Food - RM XX
GST (X%) - RM XX
Service charge (X%) - RM XX
Total - RM XXX
On first sight, GST does not make a difference to you and i, unless the rate is more than 5%. Apparently the figures flying around is 4% (although feng shui wise, i don't think it is such an "ong" number, but i will stick with 4 if they decide to go with 8%)
Go one step further, certain items like soft drinks are currently subject to sales tax of 10% and you pay service tax of 5% on it, how about when GST comes in?
Sales tax regimeBill to Restaurant
Price - RM 10
Sales tax (10%) - RM 1
Total - RM 11
Bill to Customer
Price - RM 11 + 20% margin
Service tax (5%) - 66 cents
Total =
RM 13.86GST regime (which replaces sales tax and service tax)
Bill to restaurant
Price - RM 10
GST (5%) - RM 0.50
Total - RM 10.50
(BUT, restaurant puts the 50 cents back in their pockets, due to an unique way how GST works)
Bill to customer
Price - RM 10 + 20% margin
GST (5%) - RM 0.60
Total RM 12.60Wait a minute, RM 13.86 versus RM12.60?
Conclusion: Shouldn't GST actually make dining outside cheaper?? So i say, bring it on!
Disclaimer: The above is a very simple layman explanation as to how GST in its many magical ways can bring good to us. However that being said, not all items are subject to the current sales tax and service tax but when GST comes in, a bigger basket of items will be subject to tax. In the eyes of a foodie however, eating outside food should be cheaper, if not the same!