The Imposing Of Goods And Services Duty Economics Essay

The imposing of Goods and Services Tax (GST) will replace the Malaysian service and sales duty. GST has been implemented in US, Singapore, Thailand and Japan where Malaysia's GST will be billed four percent for investing transactions. The essential necessities like sugars, flour, and essential oil are clear of GST in Malaysia. GST is a consumption tax where everyone can be priced of all the resources of goods and services. For example, if the full total price of your good is RM10, then consumers will have to pay an extra 40 cents after GST is incurred. However, GST will have an impact on the center and low income group in Malaysia who use their income for basic requirements.

Government impose fees on the purchasers and retailers. When there is a tax on buyers, they'll buy less and this discourages consumptions of goods and services. Tax on purchasers will improve the cost of buying and hence demand diminishes. The demand curve will shifts to remaining by the duty. Buyers will need additional money to buy the goods produced and services performed. When there's a tax on retailers, they'll sell less and discourages creation of goods and services. Taxes on retailers will improve the cost of production and hence lower the way to obtain goods and services. Because of this, the amount of the goods sold will decrease. The source curve will shifts to still left by the quantity of the tax. Purchasers and vendors both will have to keep with the tax. The buyers will have to pay more for the products while the sellers receive less profit. The retailers will earn less if the taxes is imposed. The federal government use the revenue from fees to subsidy the items which needed by the people. Rice, petrol, engine oil, sugar and rooster are good examples that authorities subsidies for people. These items are incredibly essential in their lifestyle. In my opinion, taxes should be imposing on the selling of cigarette smoking and alcohols. If the federal government impose duty on these two items, the demand of tobacco and alcohols will reduce. It is because smoking and alcohols have negative impact inside our body. The individuals slowly realise the value of having a wholesome lifestyle. If the price tag on smoking cigarettes and alcohols increases, people will eat less. It is because the populace of the united states mainly contain lower income group. This group of individuals do not have enough money to buy when the price rises. The diagrams below show the illustrations of duty on customers and tax on vendors.

P

S

Psellers

P without tax

Pbuyers

Tax

D1

D0

Tax on buyers

0

Q

S1

P

S0

Pwithout tax

Pbuyers

Tax

Psellers

D

Q

0

(b) Taxes on sellers

Besides taxes, price control also regulates the marketplace when the market segments fail. Price control consists of two works which is the roof price, the utmost price billed to the consumers and floor price, the minimal price producers sell. Ceiling price is the maximum limit placed by the government for goods and services. This is to help the customers which will be the low income group in Malaysia. The roof price is defined based on basic needs like sugar, olive oil and grain. Ceiling price increases the quantity demanded of a best for consumers and decreases the quantity given by the makers or sellers. Sellers cannot sell goods and services above the roof price. Because of this, they'll leave the marketplace. When the quantity demanded is more than volume offered, this will incur shortages for goods and services. Manufacturers won't have the incentive to produce more while the consumers will demand more than normal condition. The manufacturers would likely to produce low quality products.

Price roof have been impose on the glucose market and rice market in Malaysia recently. The suppliers of sugar will not want to sell their products at roof price. Then, the glucose producers will supply less sugar in the market. Hence, the consumers will be facing panic-buying where the consumers scared that they can not need enough sugars to make cakes and refreshments especially during festive celebrations. Consumers will be healthier if they have less use of sweets. This policy will cause hardship to Malaysians. In contrast, consumers will enjoy the advantage of having a low price for goods and services. Consumers wish to pay less than more on goods and services and save more because of their futures.

However, the lack triggered by the suppliers or manufacturers creates a dark market. That's where the products and services are bought and sold illegally. Black color market creates problem for the indegent people. The indegent people will not get the products if they don't have enough money. In a very dark market, people who bid and ready to pay the best will get the products. If the roof price of any good in Malaysia is leaner than the price in worldwide, the providers will sell the nice to other country other than Malaysia. The main reason is they can earn extra revenue if indeed they sell abroad through smuggling. Dark market always associated with legal activities like providing firearms, tobacco and drugs. The diagram below shows the illustration of the roof price.

Price

Equilibrium price

Supply

Equilibrium point

Price ceiling (binding)

Pe

Pn

Shortage

Demand

Qe

0

Quantity demanded

(c) Ceiling price

The aim of floor price is to improve the income of producers. Authorities set the minimum amount price for the products and services that proposed by the producers. For example, when the price of petrol increases, the quantity demanded by the consumers decreases. When the quantity demanded reduces, you will see more supply in the market, then surplus of goods and services incur. When surplus occurs, suppliers will produce too much and consumers demand too little. The surplus bought by the federal government can be utilized when there is scarcity of goods and services at ceiling price. Consumers would need to pay a higher price for goods and services. The suppliers or companies are assured to an increased price and hence they increase development. However, the manufacturers are assured temporarily as there are more contests in their own industry. The diagram below shows the illustration of floor price.

Surplus

P

Floor price (binding)

Pn

S

Equilibrium price

D

Equilibrium quantity

0

Q

(d) Floor price

In conclusion, the Goods and Services Taxes and price control raise the efficiency of the market and have some positive and negative impacts in different public plans. The GST has to be good with either to suppliers or consumers. Besides public policies, the distribution coverage can also raise the efficiency of a market. Ceiling price and floor price are impacting the consumers' demand and the suppliers' resource curve. The federal government has to care for the lower income group in order to decrease the price of basic goods and services in their lifestyle.

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