TRYING TO UNDERSTAND - DIESEL PRICING

It cannot be denied that the financial crisis in USA has affected our Malaysia. The government has put in place 2 stimulus programs to spur economic growth and hope to lessen the tough impact that has befall most Malaysians. Our businesses are badly affected, many employees have had to sacrifice pay cuts and lower income. Some have lost their jobs and cannot find another job because vacancies are few. The government has provided many incentives to encourage business and job creation.

Prices of commodities, raw material and oil has fallen to new lows, creating cheaper cost of production and services. The price of industrial diesel delivered as at 16th March has fallen to RM1.1936 per liter but due to Government Sales Tax, implemented from November 2008, the price of industrial diesel is RM1.3900 per liter. The Government Sales Tax is RM0.1964 per liter. It is hard to understand why the Government needed to implement the sales tax which inevitably increased the industrial diesel price and effectively increase cost of production and services. What is the rational? On the one hand offering incentive and on the other hand collecting sales tax and increasing production costs.

During these difficult times, the Government should dispense with the Sales Tax.