By Saleh Mohammed

The Lembaga Hasil Dalam Negeri (Inland Revenue Board) website explains that a taxable person i.e. an individual (with effect from 2015) earning an annual employment income of RM34,000 (after EPF deduction), as having to register a tax file with them.

Jabatan Kastam Diraja Malaysia meanwhile explains that the Goods and Services Tax (GST) is a multi-stage consumption tax on goods and services. It also says we need to pay taxes so that the government can finance socio-economic development, which includes providing infrastructure, education, welfare, healthcare, national security etc.

On one hand, we do not have to pay tax if our annual employment income is below RM34,000 (after EPF deduction) but we have to pay GST even if we are not employed or retired.

There may be more than two million retirees who have been paying GST from a year ago. The exception would be government pensioners who still receive an income via their pension and enjoy medical benefits. Without any employment income, non-government retirees have to pay this tax called GST which is devouring our hard-earned savings. GST by nature is designed to tax those who cannot afford to be taxed in the first place.

During our working days, we also contributed to nation building and paid so much taxes (at higher rates and lesser deductions) and thought that the government of the day would look into our wellbeing after we retire. Sadly, this is not the case for non-government retirees. Our pay was also low as confirmed by the Employees Provident Fund (EPF).

Here are some examples of the impact of GST on non-government retirees. To transfer my money electronically out from my Tabung Haji account to my current account, GST is imposed for bank charges.

Wear and tear of my old washing machine and old refrigerator calls for replacement and again I have to pay this tax.

A friend who forgot to settle his water bill (outstanding for more than two months) got his water supply disconnected. The connection charge also attracts GST. It is like ‘sudah jatuh di timpa tangga’. There are more examples, like insurance renewal, better quality bread, electricity, etc but let me stop here.

The prime minister promised the goal for 2016 was to be a safer, more prosperous and equal society. He also said: “The wellbeing and advancement of our people is always in our minds when we set policy.”

Given our situation as non-government retirees, it is difficult to reconcile the statements made by the PM and what we are currently facing.

The Future of Retirement Report by HSBC produced early last year shows living inheritance is a cause for concern for retirees in Malaysia where 63% of retirees are worried about not being able to support family or friends financially. This is the highest percentage for this type of concern in the world.

54% of Malaysians are also concerned about being reliant on family or friends for financial support. Despite no longer being in paid employment, it said 86% of Malaysian retirees would continue to provide regular financial support to at least one family member (including a spouse). The report’s findings were based on an online survey of more than 16,000 people in 15 countries, conducted by Ipsos Mori in August and September 2014.

This is somewhat supported by the EPF. It was reported in March 2015 (before GST implementation), that the EPF says that nearly 80% of workers who will turn 55 this year will not have enough savings in their account to live above the poverty line. The reason for this is that most of them were on low wages when they started contributing to the fund in the 1980s, and continued earning relatively low salaries until they turned 55.

At age 60, the nation’s official retirement age, Malaysians may well find themselves with no assets left, but with roughly 20 more years to live, according to International Pensions calculations. With an average life expectancy of 75 years, the Malaysian population is expected to experience health problems in the last 8 to 10 years of their lives.

Can we say BR1M would assist us for this increase in costs? If we look at the purpose of the BR1M scheme, it was to offer some assistance to households that fall into the low-income group, in order to combat the rising cost of living. GST was not there when BR1M was introduced and it is a new and specific additional cost item.

Take the case of Singapore – they have GST Voucher (GSTV) benefits as well as other budget benefits such as the 5-Year Medisave top-up and the Service and Conservancy Charge (S&CC) rebates for eligible citizens. In addition, there is a GSTV–Seniors’ Bonus for the many older Singaporeans to help them with their daily expenses. This comes on top of the GSTV–Cash.

“Truly, your Lord enlarges the provision for whom He wills and straitens (for whom He wills). Verily, He is Ever All-Knower, All-Seer of His slaves”. (Al-Isra 17:30). We have faith in the giver of provision but am more concerned on the takers who straiten our provision.

During the budget speech in October 2015, the prime minister said the government had collected RM39 billion in revenue so far from the GST, compared to the predicted RM18 billion which would have been collected had the Sales and Services Tax (SST) been retained. In January 2016, he said the GST collection to date amounted to RM51 billion.

Since GST is the saviour of the people, I wish to propose a department or a ‘Bahagian’ to be established to look after the wellbeing of non-government retirees just as the Bahagian Pasca Perkhidmatan (Pencen) looks after government retirees.

Saleh Mohammed is an FMT reader.

With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.