29/09/2025
GST 2.0 promised cheaper goods. But why do prices still feel the same?
Linking back to my previous post where I highlighted why GST benefits may not immediately reach customers.
๐๐ก๐ ๐๐๐๐ฅ๐ข๐ญ๐ฒ ๐๐ก๐๐๐ค:
Everyone assumed: Lower tax = Lower prices.
But businesses don't operate on Excel sheets.
๐๐๐๐ฅ ๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐ ๐๐ซ๐จ๐ฆ ๐ญ๐ก๐ ๐ฆ๐๐ซ๐ค๐๐ญ:
Sunfeast Marie at DMart:
- Before GST 2.0: โน119 (Base โน100.85 + 18% GST)
- After GST 2.0: โน115 (Base โน109.53 + 5% GST)
- Expected price: ~โน105
- Actual price: โน115
๐๐ก๐๐ญ ๐ก๐๐ฉ๐ฉ๐๐ง๐๐ ๐ญ๐จ ๐ญ๐ก๐ โน10 ๐๐ข๐๐๐๐ซ๐๐ง๐๐?
Recent data backs this up:
- Only 1 in 10 consumers got full benefit on food & medicines
- 3 in 10 saw benefits on appliances
- 7 in 10 got full benefit on vehicles (where competition is fierce)
๐๐ก๐ฒ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ๐๐ฌ ๐ฉ๐จ๐๐ค๐๐ญ ๐ญ๐ก๐ ๐๐ข๐๐๐๐ซ๐๐ง๐๐:
This isn't greedโit's economics. Companies price based on:
โ What customers are willing to pay.
โ Market competition levels.
โ Demand elasticity.
๐๐ฎ๐ญ ๐ก๐๐ซ๐'๐ฌ ๐ญ๐ก๐ ๐๐ข๐ ๐ ๐๐ซ ๐ฉ๐ข๐๐ญ๐ฎ๐ซ๐:
Short term: Yes, businesses capture some tax savings
Long term: This creates a powerful multiplier effect:
- More money stays in private economy.
- Higher production incentives.
- Increased competition over time.
- Eventually, lower prices through market forces.
๐๐๐จ๐ง๐จ๐ฆ๐ข๐ ๐๐ฏ๐ข๐๐๐ง๐๐:
A 1% indirect tax reduction boosts consumption by 0.6% across sectors. GST cuts on durables already show 12% surge in e-commerce sales.
๐๐ก๐ ๐ญ๐๐ค๐๐๐ฐ๐๐ฒ:
Don't expect instant price drops when taxes fall. The real benefit shows up as stronger economic growthโand eventually, genuinely lower prices through competition.
๐.๐. ๐๐๐ฏ๐ ๐ฒ๐จ๐ฎ ๐ง๐จ๐ญ๐ข๐๐๐ ๐ญ๐ก๐ ๐ฉ๐ซ๐ข๐๐ ๐๐ก๐๐ง๐ ๐๐ฌ ๐ข๐ง ๐ฒ๐จ๐ฎ๐ซ ๐ซ๐๐ ๐ฎ๐ฅ๐๐ซ ๐ฌ๐ก๐จ๐ฉ๐ฉ๐ข๐ง๐ ?
