GST more well-received now, says Najib

PUTRAJAYA, May 31 — Although it was heavily criticised when it was implemented on April 1 last year, more people have now accepted the Goods and Services Tax (GST) after realising that it saved the national economy, said Prime Minister Datuk Seri Najib Tun Razak.

He said the implementation of the GST was seen as an unpopular decision by the government and it was used as a political weapon, but economic experts feel that it was the most appropriate step by the government.

With the global economic uncertainty and without the GST, Malaysia would have faced a very serious economic crisis like Greece, he said.

“Generally, we are not a government that runs away from the responsibility of implementing any decision which is thought to be right for the nation and the people.

“However, our good and noble intentions were misunderstood by certain parties and made into a political issue, whereas rationally-speaking, it was something that could not be avoided. The strong national revenue contributed to a resilient economy which ensured the welfare of the people could be continued to be looked after,” he said. — Bernama

Returning GST to people

PUTRAJAYA: Both the RM27bil collected from the Goods and Services Tax (GST) in 2015 as well
as the RM39bil expected this year will be given back to the people in the form of major projects and infrastructure construction, said the Prime Mini­ster.

“With the GST, we can afford to carry out the MRT, the Pan Borneo Highway project in Sabah and Sarawak as well as other development plans which the people will benefit from and enjoy.

“It is from this same revenue that the Government can afford to give the special increment to public officers this year,” said Datuk Seri Najib Tun Razak.

Assuring the public that the Government was responsible and had the rakyat’s interest at heart, Najib said its good intentions were however being misconstrued and politicised.

“But if you look at things rationally, you know that (GST) is a strong and stable source of revenue and contributes towards economic resilience and the well-being of the people,” he said when presenting excellent service awards to 100 Finance Ministry staff members here yesterday.

Malaysia’s economy, added Najib, managed to register growth despite global uncertainty and weak external factors because the Government had made several right decisions that helped drive it further.

Later, at another function, Najib said the Government would continue to spend and invest more on children.

“We want them to be able to exercise good judgment, to choose well and to use this responsibly while rejecting what is harmful and not worthwhile,” he said when opening the three-day Permata International Conference 2016 themed “Children Beyond Tomorrow”.

Participants and speakers from 29 countries, including Gambia, Swaziland, Nigeria and Ghana, will examine the role of childhood in achieving sustainability in nation-building.

Batalkan GST atau hilang undi, kata Dr Mahathir

Free medication a miracle, says Dr M

The former prime minister wonders how the government can continue dispensing free drugs with costs going up.

FMT

SERDANG: It’s a near miracle that the government is able to continue giving free medication at public hospitals considering the escalating costs, according to former prime minister Mahathir Mohamad.

“When I was prime minister, we were worried about how to finance the free medicine that we were giving to Malaysians,” he told reporters here.

“During the British time, when I was still practising, it was one cent per bottle of cough mixture. So the government wasn’t spending too much money.

“But the costs of medicines have gone up. How the government can still sustain this free medical treatment is something that is almost a miracle.”

He was speaking at a press conference after witnessing the signing of an agreement between Perdana University and University of California San Diego for a medical and research programme.

He noted that not all medicines will be exempted from the GST, which will be introduced next month. Only drugs that come under the National Essential Drug List will be zero-rated, but Mahathir said some essential medicines had been excluded from the list.

He said the public should let the government know if they feel burdened by the GST.

“‎It is for the people to respond,” he said. “If this is a burden to them, they can tell the government, ‘If you charge taxes, we will not vote for you anymore.’”

Mahathir surprised journalists for refusing to give any comment on 1MDB, of which he has been outstandingly critical.

He was asked to comment on the Cabinet’s announcement that the Auditor-General has been directed to investigate 1MDB’s controversial finances, but he said he would not answer questions about the company or about politics.

He maintained his silence on the two subjects despite persistent questioning, saying he would limit his answers to questions about the healthcare system and Perdana University, of which he is chancellor.

Parliament sees red due to anti-fuel hike, GST protest

Anwar Menteri Kewangan Pertama Minta GST Dilaksana

(Rakyat News) – Ketua Pembangkang, Datuk Seri Anwar Ibrahim semasa memegang jawatan sebagai Menteri Kewangan pada tahun 1992 telah menyokong perlaksanaan sistem cukai barang dan perkhidmatan (GST) di negara ini.

Perdana Menteri, Datuk Seri Najib Tun Razak berkata perlaksanaan GST yang telah disokong oleh Anwar telah diutarakan dalam perbentangan bajet tahunan negara.

“Saya bukan Menteri Kewangan yang pertama menyebut tentang GST. Saya mahu memberi tahu Menteri Kewangan pertama yang sebut hasrat kerajaan untuk melaksanakan GST pada tahun 1992 dalam ucapan (perbentangan) bajet, nama Menteri Kewangan ketika itu Datuk Seri Anwar Ibrahim.

“Pada 30 Oktober 1992, Menteri Kewangan pada ketika itu menyebut bahawa GST akan dilaksanakan pada tahun hadapan tetapi Anwar membuat pusingan.

“GST sejak ketika itu lagi dalam perancangan kerajaan. Jika GST tidak baik, mana mungkin dalam kerajaan ketika itu sanggup mengumumkan bahawa GST akan dilaksanakan,” katanya ketika menutup Majlis Penerangan Perdana GST di Pusat Dagangan Dunia Putra (PWTC) di sini hari ini.

Najib yang hadir pada majlis tersebut telah menerangkan kepada hampir 2,000 orang awam mengenai manfaat pelaksanaa GST yang mampu memacu ekonomi negara ke arah status negara maju.

Sebelum ini, Anwar telah menyelar bahawa pelaksanaan GST merupakan cukai menghukum rakyat.

“Tiada perubahan antara jurang kaya dan miskin. Kita akan bersungguh-sungguh menentang GST,” kata Anwar.

Menurut Najib, pembangkang sering kali menyalahkan kerajaan melaksanakan cukai tersebut walhal dalam pada masa yang sama Anwar turut menyokong penuh pelaksanaan cukai tersebut semasa memegang jawatan sebagai Menteri Kewangan pada tahun 1992.

“Kita bukan seperti pembangkang, main politik memanjang. Janji sana, janji sini tetapi perbelanjaan daripada mana? Hasil daripada mana?

“Kita bertanggungjawab. Kita mahu buat dengan cara yang baik dan teratur serta turut menerangkan kepada rakyat.

“Tidak mengapa jika ada orang mengatakan GST ini tidak popular tetapi selepas kita laksanakan GST, selepas ekonomi kita akan kukuh dan mencapai taraf negara maju, rakyat akan berterima kasih kepada kerajaan bahawa GST itu telah dilaksanakan.

“Kita akan buktikan dibawah pimpinan BN kita akan terus membawa rakyat dan negara ke arah yang lebih maju dan lebih berjaya,” katanya.

Pelaksanaan cukai GST dikenakan sebanyak 6 peratus berbanding cukai sedia ada iaitu Sales And Service Tax (SST) sebanyak 12 peratus.

GST turut dilaksanakan sebanyak 160 negara dan Malaysia merupakan negara Asia yang mengenakan cukai GST lebih rendah berbanding negara lain seperti China sebanyak 17 peratus.

Cukai tersebut lebih adil apabila mengenakan 6 peratus dari perkilangan ke kedai perkhidmatan untuk pembeli tidak perlu khuatir akan pembelian barangan yang bercukai berganda ataupun cukai tersembunyi.

Ia juga dapat mengurangkan kos perniagaan peruncit daripada pembekal kerana pembekal boleh mendapatkan pulangan GST.

Parliament: GST Bill passed in Dewan Rakyat

The Star
by YUEN MEIKENG

KUALA LUMPUR: The Goods and Services Tax (GST) Bill 2014 was passed in the Dewan Rakyat on Monday after two bloc division votes were taken among the MPs.

The Bill, which seeks to implement the 6% tax was passed after the number of votes supporting it outnumbered those which were against it.

In the first bloc division vote, the Bill was passed for the second reading after a total of 119 MPs voted in support of it versus the 81 who opposed.

No debate was held for the Bill at the third reading or committee stage, prompting the Opposition to request for another bloc division voting to be conducted.

The Bill was passed by the Dewan after the results were 119 votes in favour of the law against 81 that were against it.

Deputy Finance Minister Datuk Ahmad Maslan wrapped up points raised in the debate, which saw its fair share of arguments from both sides of the divide.

Opposition MPs held up placards and banners with the words "Tolak GST (Reject GST)" to show their dissension.

Prime Minister Datuk Seri Najib Tun Razak (BN - Pekan) also showed up to vote for the Bill to be passed.

It was reported that the GST will replace the sales and services tax and is set to take effect from April 2015.

More than 15,000 at anti-GST rally

A threat of a heavy downpour also failed to diminish the spirit of the participants from taking part in the rally.

KUALA LUMPUR: More than 15,000 people gathered at Dataran Merdeka today in support of the anti-GST rally, and by 4pm, thousands more were expected to join the crowd. Organisers believe the final number could be closer to 20,000.

A threat of a heavy downpour also failed to diminish the spirit of the participants from taking part in the rally.

Earlier the rally kicked off with a strong crowd support and speeches from NGO leaders in front of the iconic KLCC twin towers.

By 2pm, more that 3,000 people had gathered at the scene, with more people joining in as the crowd started to march towards Dataran Merdeka.

The rally started with speeches from civil society leaders – including Bersih chairperson Maria Chin

Abdullah and her predecessor S Ambiga – who lambasted the government’s plan to implement the GST. They also called for equal rights for local and foreign workers in conjunction of May Day.

“Everyone is going to suffer under GST. But the rich are only going to get richer,” said Maria.

“It is important for everyone to know the truth about GST and it is important for us to oppose the implementation of the GST,” she added.

“(And) not to forget free and fair election,” she further said.

Her views were later mirrored by speakers from PSM and the anti-Lynas activists.

Apart from KLCC, people had also gathered at selected locations in Dataran Maybank, opposite Sogo shopping complex and Masjid Negara. They would all march towards Dataran Merdeka.

Traffic police could be been assisting in managing the traffic to allow a smooth march towards Dataran Merdeka.

Gasak sampai tumbang

Earlier it was all well at all major roads leading to the city ahead of the May 1 rally – also dubbed as the anti-Goods and Services Tax (GST) protest – scheduled for the later part of this afternoon.

The scene at the KLCC – one of the meeting points – shows hundreds of people starting to gather.

Likewise, people have started gathering at Dataran Maybank, Sogo and Masjid Negara, all awaiting the green light from the organisers to start their peaceful walk towards the Sultan Abdul Samad building opposite Dataran Merdeka.

Chanting ‘Gasak Sampai Tumbang’ and ‘hidup rakyat‘, the majority of them are walking about or standing by the roadsides under the watchful eyes of the police who are there to avoid unnecessary incidents from occurring.

Opportunistic hawkers selling mineral water bottles and canned drinks have also been spotted plying their wares to the people present.

On April 21, IGP Khalid Abu Bakar urged rally organisers not to gather at Dataran Merdeka in Kuala Lumpur but a three-member Appeals Court panel ruled last Friday that the 10-day notice requirement under Section 9 of the Peaceful Assembly Act was unconstitutional.

Meanwhile Bernama reported that some of the participants had defied the police advice by taking along children and carrying placards.

Yesterday, Kuala Lumpur police chief Mohmad Salleh said the participants were allowed to gather

around the Merdeka Square but barred from entering the field and podium as they were being upgraded.

They are also not allowed to take along children, loud hailers, placards, banners, and weapons as the actions violated the Peaceful Assembly Act 2012, he added.

Policemen and Kuala Lumpur City Hall enforcement personnel are manning Dataran Merdeka, the focal point of the rally where the participants are expected to assemble between 2 pm and 5 pm.

Nube wants govt to stop GST

Nube general secretary J Solomon said by implementing the GST the government does not care for the lower income group.

KUALA LUMPUR: National Union of Bank Employees (Nube) wants the government to reconsider the implementation of the Goods and Service Tax(GST) .

Nube general secretary J Solomon said e said his members will surely struggle as the lower rank staff don’t earn much and GST will be a burden to them.

“The banks and the government are making huge profit but sadly thyey are selfish and do not care about people’s welfare.
“Now-days banks and government are charging for everything.We have called them for a dialogue regarding this issue but they haven’t responded.

Solomon said GST is not a solution to sustain Malaysia’s economy growth.

“The government should look for other solution to sustain the economy,” he said.

GST is a service tax for products and services and set to be at 6%.

GST is set to be implemented on April 2015.

He said Nube will join forces with olitical parties to fight the implemention of GST.

Ensure income equality before GST

Pakatan dwells on wide reaching issues pertaining to the GST; as they strongly believe that M’sia may well be heading towards more corruption and fraudulent practices.
COMMENT

By Raja Ahmad Shahrir

The avoidance of taxes is the only intellectual pursuit that carries any reward – John Maynard Keynes

Today, Pakatan is presenting the shadow budget in anticipation of the Federal 2014 Budget. One important area that warrants serious attention is the implementation of the goods and services tax (GST).

In the past 20 years or so, GST (or in some countries VAT (value added tax)) has been implemented in developed and developing countries to broaden the tax base and increase government revenue. The official website of the Royal Malaysian Customs Department states that as of 2010, a total of 146 countries have implemented GST/VAT.

Malaysia is expected to generate revenue of RM20.5billion with the implementation of 4% GST (except on basic necessities such as rice, flour, cooking oil, education, public healthcare etc). This is a 36% increase in revenue compared to the existing sales and service tax (SST), which the GST is meant to replace.

Thus, the GST is expected to account for approximately 13-14% of total tax revenue if implemented, as compared to 9.9% in 2012 with SST.

However, the key question is, what are the risks involved when GST is implemented by a government that is not managed effectively and efficiently?

Historically, two key risks emerge when a country tries to implement GST without first having effective processes and policies in place for better governance.

Firstly, the potential for fraudulent practices may arise among businesses and government officials, and secondly, the potential for failure due to lack of proper planning.

Potential for fraudulent practices

In essence, the GST’s mechanism is such that products and services are taxed at each stage of the supply chain, resulting in an input and output tax. The input tax incurs on business purchases and expenses (relevant to manufacturers or retailers), while the output tax is the tax charged to the buyer. For businesses (consumers generally have no input tax), the difference between the output from the input tax is the amount paid to the government.

However, if the input tax exceeds the output tax, then the business can claim a refund. This creates an opportunity for corruption as the power of tax officials to make refunds may open doors to bribery by business owners. Furthermore, a government that faces budget pressures may also delay refunds to businesses. These fraudulent practices are not only evident with the implementation, but also during revisions to the GST.

In India, the GST was revised lower and consumers should have benefited from the reduced tax sales. Unfortunately, due to lack of monitoring, businesses were keeping the extra gain by charging consumers at the same price levels.

In Pakistan, government officials are wary of the potential for corruption and under-invoicing as the country is considering increasing the GST from 16% to 17%.

Without proper management, it is not surprising for some countries to discover that the implementation of GST indeed lowers government revenue, instead of increasing it.

Potential failure due to lack of proper planning

In 1995, Ghana implemented the VAT system that lasted only three and a half months.

The main reason for Ghana’s failure was due to improper management of public perception, insufficient time to identify the right people to implement procedures and starting taxpayers’ registration, and an unprepared tax administration. All these factors boiled down to the government’s inefficient and ineffective planning prior to implementation.

A similar case occurred in Ukraine from 1998 to 2004; real GDP rose by 49%, but the VAT to GDP ratio decreased by 33%. Generally as GDP grows, VAT yield should also rise with at least the same rate as GDP.

A study found that the decline in VAT to GDP ratio was caused by the country’s ineffective tax administration.

Successful GST implementation is contingent to income equality

The chart above (GST vs CPI) shows the transparency level of a country and its GST/VAT rate.

70% of the top four countries have GST/VAT rate of more than 15% (highest is 25% for Norway, Canada and Denmark, the most transparent at number 1).

Coincidently, Denmark leads the way with regard to distribution of income. Not surprising then, that Denmark has the lowest rate of poverty in Europe.

Having a broad based tax system can be socially successful if the income distribution is flatter within the country.

Gini Coefficient and GST

The issue of regressive tax will not be as evident if the gap between the rich and poor is not too large. Therefore, a quick look at the top ten most transparent countries shows that 8 have a GST/VAT that is more than 10%. However the Gini coefficient of these 7 countries is within the 25 – 35 range.

In comparison with countries such as Paraguay, Zimbabwe, Russia, Vietnam, Indonesia, Papua New Guinea and Venezuela (GST/VAT rate of 10%, 15%, 12%, 10%, 10%, 10% and 16.5% respectively), the Gini coefficient ranges between 36 – 52, with Paraguay, Zimbabwe, Russia, Papua New Guinea and Venezuela all above the 40s mark.

In Malaysia, the Gini coefficient is higher even compared to Indonesia, Thailand and Philippines. Lower income groups will have to fork out more of their income to GST.

There are also other factors that should be taken into consideration prior to GST’s implementation. Among them are the infrastructure, the people, the processes and policies.

With the on-goings in Malaysia such as the NFC, guns missing in the sea (and possibly toilet), large spending on computers and study trips, the question looms if GST should be implemented.

The government should instead focus on the root cause that is causing serious leakages in public funds. From a government’s management perspective, we have a cost issue, and not revenue.

Raja Ahmad Shahrir is Research Associate at Institut Rakyat, a think tank affiliated with PKR. He tweets at @RajaShahrir and facebook Raja Ahmad Shahrir

Pakatan MPs in favour of anti-GST protest

Pakatan parliamentarians throw support behind Anwar Ibrahim's proposed plan to stage a nationwide protest if the GST is introduced during Budget 2014

KUALA LUMPUR: Pakatan Rakyat MPs today agreed to proposal by Opposition Leader Anwar Ibrahim that a nationwide protest should be staged if the Goods and Sales Tax (GST) is introduced in Budget 2014.

“The rakyat will be further squeezed with the implementation of the GST. The price of petrol, flour and sugar are also expected to go up when the Budget is tabled in two weeks,” said Klang MP Charles Santiago

“Instead of increasing prices and implementing the GST, the government should focus more on fighting corruption and stopping the leakages.

“I’m certain that with GST being implemented, the lower and middle income earners will be hit the hardest as the GST will indirectly increase food, medicine, transportation and property prices,” said Charles.

“Since wages are not increasing, more taxes will burden the public and leave them in dire situations,” he added.

Kapar MP G Manivannan is also in favour of a nationwide protest, stating talks will be held to educate the public on the expected significance and implications on the rakyat once the GST is introduced by the government.

He slammed the Barisan Nasional, particularly Prime Minister Najib Tun Razak for acting differently before and after the general election.

On Sunday, Anwar announced that Pakatan will organise nationwide protests if the GST is imposed in the upcoming budget, stating that the imposition will further burden the people.

GST is a value added tax replacing the Sales and Service tax, that will help the government to rake in additional revenues to offset its deficit budget.

Parti Sosialis Malaysia’s (PSM) national chairman Dr Nasir Hashim and Pokok Sena MP Mahfuz Omar (PAS) have also come out in support of the idea and said that they too will join Pakatans’ planned nationwide GST protests.

They added that the government should be humane towards the people who are facing hard times due to the rising cost of living.