Posted tagged ‘GST’

GST makes 2015 year of living dangerously

December 25, 2015

2015 will always be considered one of the most dreadful Years for Malaysians due to the GST introduction on 1st April 2015. GST may have helped to narrow the budget deficit for 2016 but it created and continues to cut bigger holes in the people’s pocket. The prime minister cum finance minister has said that the government’s collection of revenue through the SST would have amounted to only RM18 billion. But GST is expected to rake in RM39 billion. And this make Malaysians poorer by the amount. While we were dependent on oil and gas all these years, it never struck the ruling government to develop its human resources and move up the supply value chain. The oil curse has reached Malaysian shores. The oil and gas dependence by the government has made the policy makers into complacency, recklessness, extravagant and unconcerned about integrity and honesty.

Malaysia’s long history of mega scandals like the RM2.5 billion from BMF, RM1.6 billion from MAMINCO, RM12.5 billion in PKFZ, RM9.4 billion from MAS, RM30 billion from Bank Negara forex dealing , RM10 billion Perwaja steel, RM250 million national feedlot and many more have made Malaysia poorer nation. Malaysia is currently surrounded by the 42 billion 1MDB and 2.6 billion controversies. Wastages, corruption and pilferage have become institutionalized.

To save the situation, the prime minister has resorted to implementing a 6% GST. Malaysians are going into 2016 with cost of living increasing and uncertain international economic growth. The prime minister seems to depend heavily on his foreign and private advisors who are supporters of neo liberal policies in shaping his economic policies and they have strongly recommended GST. But this view is not gaining traction among Malaysians.

Before the GST was introduced government promised people that prices of goods and services will go down because SST was 10% + 6% but GST only 6%. But instead prices of goods and services increased 2 to 3 fold. Malaysians felt mislead and deceived by their own government. GST introduced along with the withdrawal of subsidies on petrol and sugar, subsidy for electricity being reduced and tolls were hiked. Government has announced that LRT, ERL charges are also set to increase. All these measures by government at the same time has increased cost of living tremendously till Malaysians from all walks of life are feeling the pinch.

GST has now become an integral part of Malaysian tax regime and whenever government need to increase revenue they can just raise the GST tariff from 6% to up 7% or 8%. Singapore started GST at 3% now stands at 7%. With Malaysian’s household debt to GDP standing at 87.9%, one of the highest in the world, this regressive tax has been a hard blow to the not only bottom 40% but also the middle 40%. The long term ramification remains unknown and grim. These added financial pressures from 6% GST on the majority of Malaysians will increase their indebtedness further leading to more crime and social tensions in society as a whole. It’s time for the government to initiate a social economic impact study on the consequences of the GST introduction.

To add injury to insult GST was introduced in the mist of the prime minister’s own worst and most expensive corruption scandals. The RM42 billion 1MDB debt and RM2.6 billion donations where the prime minister is directly implicated remains unsolved and have increased the political risk in Malaysia. All these negative developments have weakened the Malaysian ringgit considerably leading to high cost of imports and increase in prices of goods and services. The high public debt was matter of concern among policy makers. GST needed to pluck the holes.

To make matters worse GST implementation was flawed and haphazard. Of course it’s normal to have teething problems but Malaysian’s problem went beyond the gestation period. The list of zero rated and exempted items were not settled long after implementation. The lack of consultation with workers representatives on service charges led to more confusion. The inability of customs department to handle technical questions and non-Malay speaking enquiries further added to confusion and disappointments. Poor implementation of the GST caused some sundry shops and retailers to close down. There are major discrepancies in the prices charged post GST which went well beyond the 6% GST level. The government doesn’t seem to have a clue why the price increased shapely and could not put a stop on traders raising prices.

GST has become a political thorn on the government especially the prime minister Datuk Seri Najib Tun Razak’s regime. Malaysia is said to be facing its worse inflation after the GST implementation despite the many zero rated and exempted items. The concern and fear now is the government raising GST tariff to more than 6% in 2016 since oil price is expected to bottom out at US20 per barrel. In Budget 2016 oil revenue was estimated at US48 per barrel. 2016 looks grimmer than this year. Hope the finance minister provides information to Malaysians on meeting his 2016 budget proposals.

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The poor feel cheated by GST

May 15, 2015

Since the GST announcement in the 2014 Budget in 2013, the government has been going around advertising that the 10% SST will be replaced by the 6% GST and, therefore, prices of goods will go down. Ministers and the government-controlled media pooh-poohed the concern expressed by the rakyat that inflation and increase in prices would be inevitable. Instead, they talked confidently and down to the rakyat – saying that essential goods would be exempted, some goods would be zero-rated and only luxury goods would be subject to 6% GST. They even went further and said the GST would benefit the people as it was in the interest of the people. “The new tax system fixes a 6% tax, as compared to the sales and services tax which amounts to 16%,” said the prime minister.

But what has taken place is the complete opposite of what the government advocated. The SST is a single-level 10% tax compared to the GST which is a 6% multi-level supply chain tax. The government concealed the truth and now it is out in the open. Prices of goods and services started increasing well before April 1, in anticipation of the compounding effect of the GST, whether or not the goods and services were to be GST-exempted. The GST is thus added to already increase prices. Peoples’ anger hit the roof when they had to dig deep into their pockets.

BN leaders had been talking about a decrease in prices with the introduction of the GST. Instead, prices went up. Obviously, there was very serious miscalculation between boardroom-planning and implementation on the part of the Customs. Issues like service charges and levying of the GST on goods produced from free trade zones were not considered until after the implementation of the GST. The list of goods and services to be included, exempted or zero-rated was announced on a flip-flop, piecemeal basis. All these contributed to the confusion.

Even the cost of pre-paid mobile phone top-up cards has increased by 6% due to the GST levy. Earlier, these prepaid top-up cards were charged 6% SST (Sales and Services Tax) but this has now been withdrawn and buyers are charged 6% GST. Why should Telcos raise the charges when the rates are the same? Telcos absorbed RM800 million in SST in the past but they are now passing this on to customers, and at a time when prices are going up. Communications Minister Ahmad Shabery Cheek’s inconsiderate and irrelevant assertion is that about two-thirds of the prepaid phone users are foreigners. To appease pre-paid users, latest news is GST will not be charged up-front but deducted as the card is used. Whichever way GST is taxed to the user of pre-paid cards.

The situation today is a far cry from what the government promised. For the first time, poor people are also being taxed on basic necessities like food and medicine. On May 1st about 20,000 or more gathered in the heart of Kuala Lumpur to protest against the GST. Not surprisingly, many kampung folks came from out of town to participate in the anti-GST rally. The GST and consequent inflation have made a big hole in the pockets of low-income earners. Deputy Minister Ahmad Maslan added insult to injury by twitting that traders who support opposition will not lower prices because GST is BN government policy. What transpired after the GST implementation shows that the government don’t have control or knowledge over the pricing mechanism in supply chain management.

The government knows that wages are stagnant and 80% of households earning less than RM3000 per month are eligible for the BR1M programme. No longer are there subsidies for petrol and sugar. The high prices of houses, cars, high cost of privatised medical care and higher education are eating into the pockets of Malaysians. Electricity, water supply and utilities like telephones and highway tolls are privatised and sold for profit. The common man’s hardships are never considered when government policies are being formulated. All that matters to the government is the interest of its rent seekers, cronies and GLCs. Years of ill-conceived policies have taken their toll on this country and public confidence in this UMNO-led government is at an all-time low. Unless it changes, its days are numbered.

Goods and Servises Tax Bill

February 23, 2010

22/2/2010

 Government is planning to table this bill in the upcoming parliament sitting.

 PURPOSE: IMPOSITION AND COLLECTION OF GOODS AND SERVICE TAX AND FOR MATTERS CONNECTED THEREWITH.

 The current consumption tax in the form of the sale and service tax (SST) will be abolished and be replaced with GST.

 The reason given by our government to implement this GST is to get more funds for development and expenses. (Estimated to get extra rm1billion then the current collection – which is rm12billions)

 However, there are few clauses which can be said to be arbitrary and disadvantage clause. (more…)

Cut wastage, eradicate incompetency and save Malaysians the 4% GST burden

December 9, 2009

Government’s effort to raise RM1 billion by introducing Goods and Services tax (GST) is another example of being penny wise but pound foolish. Time and again opposition lawmakers and concerned groups have highlighted the wastages in government spending, the nepotism and lack of transparency in awarding contracts and the poor quality of decision-making in government services.

But the BN government continues to ignore the opposition voices as irrelevant. On one hand the government engages itself in the high sounding slogans of change for the better, while simultaneously increasing 4% in GST.

It is high time the BN government takes all measures to improve the efficiency and effectiveness of delivery services, improve the financial management of taxes collected, creates an openness in awarding contracts and privatization of revenue generating enterprises.

The government has not shown any concern about financial leakages but instead increases taxes at the earliest opportunity possible.

If the BN government is really concerned about the welfare of people they must take into account views expressed by the opposition and include them in formulating and implementing money bills.

Implementing GST during an economic downturn and global slowdown is not prudent and will cause even more hardship to the poor and needy. Government needs to be more transparent to Malaysians as to how they have spent the revenue earned from Petronas.

The  BN Government must look into the annual audit report and bring to court those perpetrators involved in malpractices as an endeavor to improve the checks and balances.

The 4% GST proposed by the government is at different levels of distribution channels unlike the previous 10% ST which is collected at source. Therefore the 4% GST could inflict more pain to the poor.

Besides, does the government have the collection mechanism in place? Government must reveal the basis on which this 4% GST is implemented.

Therefore, I call upon the government to deliberate further on this issue through consultation with the opposition political parties and not to bulldoze it in Parliament.