Clowning on GST

The ‘communicating’ clown

A lot of people especially economic and political analysts are expecting Prime Minister Dato’ Sri Mohd. Najib Tun Razak to announce the introduction of the GST system as an avenue for revenue to the Federal Government’s coffer in his Bajet 2014 speech on Friday. The time table of the implementation would also be announced.

It is designed to make up in the effort of reducing dependence of revenue from income tax, reduction of budget deficit and the long term solution for the Federal Government to reduce national debt.

Federal Government is taking the necessary steps to reduce across the board subsidies and work on a mechanism for a targeted subsidy, designed for the groups within the society which deserve the continuation of subsidies so that their lives are maintained at a certain level. This is amidst world wide escalation in cost of production and distribution, which has elastic effect on cost of living.

However, contradicting statements by Deputy Minister of Finance Dato’ Hj. Ahmad Maslan is really confusing many mainstream media readers.

Ahmad Maslan: GST may not be implemented under Budget 2014

OCTOBER 18, 2013

Biz Updates From PR Newswire

Ahmad Maslan said the government has agreed in principle to implement the tax but it has not decided when to enforce the tax and its percentage in the initial stage.– Picture by Siow Saw Feng Ahmad Maslan said the government has agreed in principle to implement the tax but it has not decided when to enforce the tax and its percentage in the initial stage.– Picture by Siow Saw Feng

KUALA LUMPUR, Oct 18 — Deputy Minister of Finance Datuk Ahmad Maslan hinted today that the much talked-about goods and services tax many not be implemented under Budget 2014 to be tabled in Parliament next Friday..

He said the government has agreed in principle to implement the tax but it has not decided when to enforce the tax and its percentage in the initial stage.

“When to implement it, what percentage, we don’t know yet, though we’ve stated in official statements (to implement the tax),” he told reporters after a pre-launch to collect funds to build the Integrasi Islam Malaysia madrasah. — Bernama

– See more at: http://www.themalaymailonline.com/malaysia/article/ahmad-maslan-gst-may-not-be-implemented-under-budget-2014#sthash.vHGETwBD.dpuf

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Then he went to say this frightening statement:

GST rate may be less than 16%: Ahmad Maslan

Posted on 20 October 2013 – 08:52pm
Last updated on 20 October 2013 – 09:49pm

MELAKA (Oct 20, 2013): The tax to be levied under the goods and service tax (GST) may be less than 16%, that is, the amount under the existing sales and services tax (SST) system, says Deputy Finance Minister Datuk Ahmad Maslan.

He also did not see the new tax being a burden to the people.

“If we look at other countries that have implemented the GST, it is less than 16%,” he told reporters here today.

He had earlier officiated the High Performance Organisational Leadership Seminar at the Royal Malaysian Customs Academy at Bukit Baru, with the participation of 100 customs officers from throughout the country.

Also present was the Customs Department Deputy Director General Datuk Zainul Abidin Taib.

According to Ahmad, the government began looking at the GST in 2005 and planned for its implementation two years later, but had to postpone this due to a number of reasons, including objections from certain quarters.

He said the rate and date of implementation of the GST may be announced by Prime Minister and Finance Minister Datuk Seri Najib Abdul Razak when he tables the Budget 2014 on Oct 25.

Two days ago, Ahmad had hinted at the possibility of the much talked-about GST not being implemented under the Budget 2014.

Meanwhile, the Deputy Finance Minister said the Customs Department had collected RM25.8 billion as of last Thursday for 2013.

He expressed confidence that RM34.4 billion would be collected by the department by year-end. –Bernama

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What is Ahmad Maslan trying to do?

He is not helping to make Malaysians across the society understand better. In fact, he is creating a bout of confusion. Especially when his response to the quantum of the GST if and when it is introduced.

Bernama report a few hours ago

Bernama report a few hours ago

Compared to economists and professionals in the capital market who have contacted by media, they are providing a more ‘cushioned’ response to help ‘pad the news’.  This is to make more Malaysians especially the middle income segment of society absorb the thought of having to pay consumption tax.

Alliance Bank Chief Economist Manokaran Mottain expects the GST to be introduced at the rate of 4-5%.

The fact is that Federal Government especially Treasury did not do enough to educate the Malaysian public about GST as a consumption tax to be introduced, how it relates to revenue and the complete works of the subsidy system and the projection of the nation cash position and commitments.

Some of the available materials for public consumption are far too technical for the common person on the street to comprehend, let alone support.

The Minister in-charge of PEMANDU, who was said to be a ‘people person and communicator’ when he was in Shell, did not do a good job on unlocking the confusion ball. In fact, he made it worse.

Idris Jala pushes for GST, says ‘much income’ unreported

BY BOO SU-LYN OCTOBER 21, 2013

Jala explained that a value-added tax like the GST, where a tax is paid on each step of the process, is a Jala explained that a value-added tax like the GST, where a tax is paid on each step of the process, is aKUALA LUMPUR, Oct 21 — Malaysia needs to introduce the controversial goods and services tax (GST) – which is likely to start in 2015 if announced in Budget 2014 this Friday – because much income goes unreported, Datuk Seri Idris Jala said today.

He added that it is not sustainable for the country to depend on fewer than two million tax payers in a country of nearly 30 million people,

“Out of some 29 million in people in Malaysia, only less than two million people pay income tax,” the minister in the PM’s department wrote on his blog today.

“In fact, if we don’t widen the tax base, there is absolutely no room to cut income taxes further. For various reasons, including the fact that much income goes unreported, we need to broaden the tax base,” he said.

Jala explained that a value-added tax like the GST, where a tax is paid on each step of the process, is a “consumption tax” that taxes people with spending power.

Putrajaya is seeking to introduce the goods and services tax (GST), possibly in the upcoming Budget 2014 that will be tabled on Friday, in a bid to broaden the tax base and to narrow the fiscal deficit.

The federal government has stated that it aims to reduce the fiscal deficit from 4.5 per cent of the gross domestic product (GDP) last year to 4 per cent this year, and gradually to 3 per cent by 2015.

Jala stressed that the GST would be implemented only in 2015 if it were to be announced in Budget 2014, as 12 to 18 months is needed for preparation.

He also allayed fears on the impact of the GST on the lower-income group, pointing out that the tax rate for essential goods like food, public transport and education will likely be set at zero.

“Also there is currently the sales tax as well as the service tax now of 6 to 10 per cent which will be repealed once the GST is introduced. In the first few years at least, we expect that the GST will be revenue neutral for the government because gains will be offset due to the termination of the sales and service taxes,” said Jala.

The minister explained that the GST would make tax evasion harder, as complete records are necessary at each stage of the taxation process for businesses.

He gave the example of a drink manufacturer, who would have to add a tax, representing the GST, to their product sold to customers, after suppliers similarly include the GST in their sales of sugar, flavour and bottles to the manufacturer.

“But you are entitled to claim a rebate on the tax to the value that you did not add, in other words the tax your suppliers added on. To do that you have to keep proper and complete records,” said Jala, referring to the manufacturer.

“For instance, studies have shown that Malaysia has large capital outflows which can’t be reconciled in the national accounts. As much as 80 per cent of this is said to be from transfer pricing where firms transfer costs to various centres around the world to minimise the tax. Once a GST is implemented, it makes it very much more difficult to do so because complete records are kept at every stage of the value-adding process,” he added.

Jala stressed that the GST is a “broad-based tax” that taxes based on consumption.

“Because it is the more well-to-do and the wealthy who will consume more, the GST automatically taxes them most, not the lower income group,” he said.

Due to public pressure, the implementation of the GST has been postponed several times since the tax was first announced during Budget 2005.

– See more at: http://www.themalaymailonline.com/malaysia/article/idris-jala-pushes-for-gst-says-much-income-unreported-fewer-than-one-in-10#sthash.owlkfnRn.dpuf

***************

We doubt that Ahmad Maslan even in his position as the Deputy Minister of Finance could explain all of it and rationalise why it is necessary for consumption tax to be introduced, to ensure that the burden of subsidy has not been ‘wasted’ and draining the nation’s coffer indiscriminately.

Neither are we confident that the BN elected representatives could do it too, when they meet their constituents.

Even the recent retail petrol and diesel price hike has not managed to convince the majority of Malaysians. More over, when the decision to reduce subsidy as an excuse to lessen the burden  on the Federal Government does not commensurate with the across the board impression and perception about inefficiencies, wastage and worst of all, practice of abuse and corruption.

A lot of Malaysians also question efficiency of the collection and revenue system for the nation such as Inland Revenue Board and Royal Customs and Excise.

The demand of a modern Malaysian society is that they want to be informed and in the know. Many of the younger and educated ones are progressively growing to be more critical and willing to challenge the decisions that the Federal Government take and embark.

Inability to respond, engage and rationalise would simply compound to the distrust that the Federal Government under Prime Minister Najib is doing the right thing and heading the right direction.

Prime Minister Najib should the very least consider having the right spokesman if not the right assistant as deputy minister level in the most important ministry of the Malaysian Government. He simply cannot afford to make anymore perception slip-shots.

Published in: on October 23, 2013 at 23:59  Comments (17)  

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17 CommentsLeave a comment

  1. GST..hmm… kenakan kepada high income group, buang subsidi Ron 97 Dan absorb pada Ron 95, kuatkuasakan/benteras bisnes haram yang berleluasa, cukaikan pekerja luaran yang hantar balik rm billion, kemaskinikan sektor ekonomi pertengahan, hiliran/ huluan( versi ekonomi baru ni..). Paling penting cut down foreign konSultan.. Add up together, we save billions to minimise deficits…

    Kemudian belanja berhemah, wujudkan industri dan peluang kerja-kerja berimpak tinggi ( sekarang line up calon pekerja berdaftar JPA 1.2 Juta orang.. still counting.. New Slogan – business for all !

    KDNK again 2014 and catch up KNK for the coming years…

  2. So abg idris projects that income to the gov would be neutral due to the offset for a few years.

    Being that i view this government as chicken shit, i hope proper incremental analysis were performed. Maybe if they enlighten us on the opportunity cost they face by dumping the gst and how it will affect the ministers or transformational leaders and how it the will affect their lavish lifestyle, maybe we will buy into their silly compounded arguments?

    This idris jala is an idiot. His communication personnels are new age chinks. It really is no wonder no one seems to fucking understand what he tries to say 97.9% of the time. Sometimes, one would think that he himself doesnt know what he’s on about.

    Must be some of jibs soldier who monitors this comment section. So to you i say, tell your boss to stop sniffing his own ass, resign and sail into the sun. You are stupid. You have no charisma. Your appointments are mind baffling and your constant indecision and decision makes people moody.

    Face the music. People hate the way you give your speeches. Always looking like someone who likes to grope breast when delivering a speech in malay. You aint got no charisma jib, buzz off.

    • You are totally out of topic – 0/100 – fail!

      Read the posting once more, understand then only give your comments.

      • Lol. Pardon me then??

    • Painkiller judas priest is not out of topic. He/she commented how poorly Jib gor has performed in the economic department of the nation. That is pretty accurate.

  3. If it’s true, as said by the Alliance Bank economist, that only 10% of the working population pay tax (presumably referring to income tax) at the moment, why not get more of the taxable working population to pay? Instead of introducing the GST under which even those who have low income may have to pay.

    Surely there are more than 10% of the working population who earn taxable income. Is it not a matter of the Inland Revenue not having an accurate database of taxable wage earners?

    Can somebody give views or explain, please. I feel that the existing sales and service tax is already sufficiently taxing the low income people. Even then, I have doubts on sales and service tax collection efficiency. But I must admit I am no expert. Just expressing doubts.

  4. Biggie,

    I am one of those who is in agreement with the introduction of consumption tax such as GST, to alleviate Govt’s coffer and narrowing the budget deficit. It is time that Malaysians realistically think about how and where they are, in this land of plenty.

    Like it or not, Idris Jala and Wahid Omar is right about trying to strike the balance between rising cost of living, growing demand for Govt spending and taxes imposed. Malaysians have been living under of the comfort of everything is provided for them, from cradle to grave.

    After all, majority of market analysts and high street commercial and IBs are very well aware of the inability to rely on annual revenue of RM125b from IRB and RM33b from Royal Customs.

    Over reliance of income from Petronas is neither good.

    The maxim of any government is ‘To provide for the things that the people cannot provide for themselves’. These ‘things that people cannot provide for themselves’ are strategic spending such as defense, international diplomacy and even judicial system.

    Malaysians as members of a society should strive to do things for themselves, without over reliance for the system to provide for them.

    The fact is that, the annual bill is very huge. The kind of money being spent on education and health is simply too big. Even the operating bit alone.

    Of course a lot more needed to the development bit of these teo items. Also rural development programs.

    In summary, social development program to make more Malaysians live better across the board it utmost priority in the Federal Govt agenda besides the dream to be a high income economy nation.

    Its time Malaysians do their bit for all these. The nation provides a conducive environment for them to be developed, find a good job and earn a living. Some even benefitted as entrepreneurs from the opportunities available due the ecpnomic growth, due to all the socio-economic development plans and programs.

    As their income position gets better, they can afford a lot more nice things. Even luxuries.

    So, they should be made to pay for all these benefits that the nation had provided for them, either directly or indirectly.

    Consumption tax is the fairest form of how the citizens and residents to do their bit. The more they consume, the more they pay.

    They should do away with the mentality of making others pay for them. Malaysians must own to the needs of their mother-land. In Malay, its ‘Ibu Pertiwi’.

  5. Dari less than 2 million yang bayar cukai tu, berapa ramai orang Melayu dan berapa pula orang Cina? Kita tahu pegawai kerajaan (yang rata-rata Melayu) tak boleh lari sebab Potongan Gaji Berjadual (PCB). That would have easily make up to several hundred thousands Malays.

    Reason I asked because I am sick of the chauvinist argument along the lines of “What we pay tax for?/ who pay tax for this country?/If not for our tax money…/etc etc”

  6. Senang cerita, orang yang paling kuat dan lantang yang akan lawan and buat fitnah about GST ni, ialah golongan towkey towkey.

    For decades they have become prosperous by having two sets of accounts. Now with the GST, goods sold are taxed at the sale point. Habis laaaa dulu profit margin 200%, sekarang kena realistic.

    With the GST we get to see for sure, just how smart the Chinese are in business, and if they truly have made it with blood and sweat as they say or was it just based on easy skimming of funds at the government’s expense..

  7. An economist say through GST tax burden will be evenly spread among the population. ? Yeah right. Know what? When it comes to taxes, they talk about being evenly spread but when it comes to wealth, no rich people or group want to whisper about evenly spread. In fact the use of subsidy as a way to fair distribution of the nation’s wealth is constantly being harassed by the likes of Jala to be cut and cut and cut. On top of cutting subsidies these neoliberals guys in suits have pushed for a GST. Yes, to replace the current govt and services tax, but GST is across the board and is very invasive where a purchase of any consumer item will be subject to GST. The trouble with this govt is it tends to imitate the economic ways of adva nced economies to fit into the Malaysia’s economy. Why bother to say other countries have GST to justify GST for Malaysia? That is not good enough reason to introduce a draconian way of tax collection. Draconian because it taxes the poor equally as it taxes the rich. This govt faham tak? The govt say only 2 million people in Malaysia pay taxes. Right but go after the rich tax evaders and quit pandering to demands to lower corporate taxes. No wonder more and more are saying that the performance of the current govt is bad. It is bad with bad advisers from top to toe and all around. The numero uno is weak and lack vusiin to intervene and help alleviate the economic struggles faced by the lower and middle income groups. Dont mention BRIM because it is one of the worst method to strike fair distribution of wealth and seems like a political expedience rather than sound economic thought.

    • I support postgrad’s views above and wish to state my views:

      1. GST makes the low income pay when it should be the high income ones who should be paying – the higher, the more.

      Salaried people earning RM2,000 – RM3,000 per month are finding it very tough to make ends meet, both husbands and wives working, poor children upbringing leading to societal values becoming chaotic, Mat Rempitism, drugs, gangsterism. What more those making less than that. They have to pay too, if GST is imposed, don’t they? And there are quite a few million of them, aren’t there? Votes of such people running away to the Opposition, remember?

      2. Leave the Sales and Service Tax as they are, just ensure collection of every cent due. Enforcement, enforcement, enforcement. Check those restaurants, pubs, eateries, hotels and the like, to ensure those who can afford to eat and drink at such establishments pay the SST, the operators collect them and pay them into the government coffers.

      3. Collect more from Income Tax. Broaden the base, check those who are avoiding, especially those who are evading tax – there’s a difference, the Income Tax people know, the accountants and lawyers know. The Income Tax people should have a sufficient number of properly qualified and experienced accountants and lawyers.

      4. For goodness sake, check wastage, redundancy, malingering and plain mismanagement in government service, will you, Ah Jib Gor. You don’t have to do much, just instruct your Chief Secretary to the Government, the man you appointed to the post, above the heads of so many others – unless the PTD has been demoralized because of that and not transforming and so-called liberalizing as fast as Ah Jib wants.

      Just ask the the Chief Secretary to use the big stick. He doesn’t have to worry about votes, he’s a Government Officer for crying out loud. He should in turn just get the Director General of the Public Services Department to take disciplinary action on all those responsible for the misdeeds reported by the Auditor General, including the Secretaries Generals, and those like in the Information Ministry claiming RM50,000 for a conference (?) trip to Switzerland. You’ll find many hundred millions Ringgit saved that’ll boost up your Revenue figures in the Budget 2014, 2015 etc, thereby lessening the need to cut subsidy, impose GST and what not.

      • Would you happen to know the complete list of items, products and/or services that would be subjected under GST and which ones are exempted?

        Probably its best to hear PM Najib out and later get the complete table before we put our thoughts to it.

        At this point, we have not enough information to simply generalise and make assumptions without fully understanding the mechanism, roll out implementation, time table and effect to the Royal Customs scheme of things and projection of revenue for His Majesty’s Government.

      • Nobody knows until tabled at the 2014 Budget debates next Friday. Maybe it’s an attempt to pre-empt the GST, though we don’t have nuclear bombs to do so, like the Israelis have on any Arab attempts, hehe.

        SST = Sales and Service Tax, GST = Goods and Service Tax, therefore the GST is expected to be a much longer list than the SST.

        Yes, budgets must always be a good balance between increasing sources of income and more beneficial ways of spending the money. Increasing investments and alleviating more of the rakyat’s problems and sufferings.

        All told, I wanna the rich pay more – including the highly profitable GLCs – and the low income people not taxed much even indirectly.

      • France has an income tax structure such that the super rich have to pay a maximum of 75%. To escape the ridiculous tax, French actor Gerard Depardieu went to live across the border in Belgium and Russian President Vladimir Putin gave him Russian citizenship (Depardieu was doing movies in France).

        But we don’t have actors as rich as Depardieu and Putin won’t offer citizenship to Malaysian millionaires for us to worry about “losing the geese that lay the golden eggs”. Giving citizenship to Malaysian millionaires won’t be a big enough PR exercise for Putin anyway.

        Hehe. Have a good week end, guys.

      • “Depardieu was doing movies in France” should have been written “was doing movies in Russia”.

  8. Correction : ‘ the numero uno is weak and lacks vision’C

  9. When GST was introduced in Singapore some 10 years ago it was 3% now it is 7% and the plan to increase to 10% in future.

    GST is a “poor man tax” system. No one can hide. Watch out kampong folks anything you spend you are “contributing” or doing sort of NS for the country. That is a good way for instant “patriotism”.


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