6. Post failed in kinabalutoday

Towards comments of Masidi Lianjun ---

With the hands-on experience on VAT or GST, then you would appreciate that rate 6% is actually destructive to everything in Sabah with little industries to reap the benefits as perceived.



I would expect Sabah is given a zero % for  5 years to catch up with the rest of the nation.   That would be very good for tourism and industries to be fully developed.

go to  http://gst-in-2013.blogspot.com/ to appreciate a lot more work for Sabah prior to implementation of GST at any rate..

5. 7% GST is sure Government Shut Through

A very good strategy to remove BN/UMNO now when Jala announced 7%, Joshua

Run-up to Budget 2014   (extracts)

10:39AM Oct 23, 2013

This Friday, Prime Minister Datuk Seri Najib Tun Razak is expected to deliver yet another budget and there have been many speculations by the public and experts on the matter.

At this time, it is unclear how much consumers will each have to pay for common goods and services and whether essential items will be excluded from the tax. Our neighbour, Singapore, first implemented GST in 1994 at 3% but has increased the rate four times since then, with the latest hike in 2007 to 7%.

4. this is off track after meant to reduce the deficit

Implementation of GST will track down tax evaders, say Idris

Published on Wednesday, 23 October 2013 03:49

Hits: 1

People who evade paying duties and taxes will be easily tracked down by the Royal Malaysian Customs and Inland Revenue Departments once the Goods and Services Tax (GST) is implemented.

Minister in the Prime Minister’s Department Datuk Seri Idris Jala said by introducing GST, the entire record-keeping process would not only become more rigorous but also contribute to an efficient collection of taxes and duties in future.

“GST is a broad-based tax based on the amount of consumption. It is the more well-to-do and the wealthy who consume more, the GST automatically taxes them the most, not the lower-income group,” he said in his blog yesterday.

Idris, who is also Chief Executive Officer of The Performance Management & Delivery Unit (Pemandu), said the implementation of the GST can also track down the country’s capital outflows as studies have shown that Malaysia has a large capital outflow which cannot be reconciled in the national accounts.

He added, as much as 80 per cent of the capital outflows was said to be from transfer pricing where firms transfer costs to various centres around the world to minimise tax.

“Once GST is implemented, it become more difficult to evade taxes because complete records are kept at every stage of the value-adding process.

“There are records of who sells to you and at what price and the same for yourself, all along the chain. It is just a matter of going down the chain to see if you are playing around with your fingers,” he said.

Idris added that if GST is announced in Friday’s 2014 Budget, it was likely to be implemented only in 2015 as the country needed a grace period of between 12 and 18 months to prepare for the value-added tax.

Idris said it was important to remember that when the GST is implemented, Malaysians can set the tax rate at zero for any number of essential goods.

“This is what the government intends to do to ensure Malaysian citizens are not burdened by taxes on essential items.

“Furthermore, the GST will help the government gain extra revenue because we expect more and more people to become affluent as measures to increase income becomes a reality.

“As consumption and affluence increases, government income from GST will increase in tandem,” he said.

Idris also said the GST would also benefit citizens as essential goods and services like food, public transport and education are likely to be zero-rated hence consumers would not pay extra taxes.

“As government revenue increases, it will have more money to provide social safety net programmes such as the 1Malaysia People’s Aid for low-income groups,” he said. — Bernama

3. official view?

Quote"Besides that, not all products will be charged the full tax under the proposed GST as certain products will be charged only half of the GST rate."
Joshua says this quite funny and impracticable!!!

GST Can Make Prices Of Goods And Services Cheaper

Tan Sri Dr Mohamad Irwan Serigar AbdullahBy Zairina Zainudin

KUALA LUMPUR, Oct 22 (Bernama) -- Malaysians can enjoy cheaper goods and services for many basic necessities if the government implements the goods and services tax (GST), replacing the existing sales and service tax (SST).

The tax, likely to be implemented by 2015, will see a proposed rate of four per cent to replace the current narrowly-applied 10 per cent sales tax and six per cent services tax.

The GST will be levied on the consumption of goods and services at all stages of the supply chain.

If implemented, some 40 basic food necessities, including rice, sugar, milk powder and flour will be listed as zero-tax items, while essential services, such as healthcare, may be classified as tax-exempt.

Most of the items were currently being taxed under the SST and the transition to GST could ease burden on the poor, Secretary-General of Ministry of Finance, Tan Sri Dr Mohamad Irwan Serigar Abdullah, was quoted as saying.

The GST will ensure that the prices of the items will not increase.

Besides that, not all products will be charged the full tax under the proposed GST as certain products will be charged only half of the GST rate.

"The GST is a must, it's not an option," Irwan Serigar said, adding that should the new tax regime be implemented, the government was confident of trimming the fiscal deficit of gross domestic product by 2015 and hitting a surplus by 2020.

Meanwhile, MIDF Amanah Investment Bank Bhd Senior Vice-President/Head of Research, Zulkifli Hamzah, said although the implementation of GST was inflationary, it would only be in the short term as consumption patterns adjusted over time.

"We expect the GST to have a transitory inflationary impact on prices, similar to the evidence found in many countries which have introduced the tax.

"The inflationary impact of the GST will depend on the rate to be decided, exemptions and parallel measures to mitigate price rises," he told Bernama.

The Malaysian Customs Department is of the view that GST's inflationary impact will be minimal as basic and essential foodstuff will be zero-rated and public amenities will be exempted.

Another factor is the lower production cost as GST paid on inputs is claimable by businesses, while savings from the input tax credits should be passed on to the consumers in the form of lower prices.

GST, a broad-based consumption tax, or value-added tax, was first tabled at the Dewan Rakyat in Dec 16, 2009 to replace the current SST, but was withdrew last year for amendments.

The transition will be part of the fiscal reforms undertaken by the government to reduce fiscal deficits and achieve a neutral balanced budget by 2020, helping the country to move towards a high-income economy as well as to achieve a developed nation status.

Economist opined that now was the right time to implement the GST as part of efforts to bolster government revenue.

Once implemented at a revenue-neutral rate of four per cent, the new tax was estimated to rake in a revenue of RM18 billion, which was quite similar to the current revenue of RM16 billion to RM17 billion from sales and services taxes at an average rate of seven per cent.

It is anticipated that Prime Minister Datuk Seri Najib Tun Razak will announced the GST in the Budget 2014 on Oct 25.

The GST would take 14 months to be implemented after it was announced.

-- BERNAMA

2. Some businessmen may go through GST

Chinese business to support GST if income tax is cut (malaysiakini)

That shows how ignorant businessmen are as far as GST and Income Tax are concerned.

Two reasons - the economy is in very bad shape especially for the consumers whose spending power has largely dried up and the timing of SOP of GST and Income Tax payments are too far apart and so far apart that many businesses would go out of business before they get the benefit of the Income tax reduction.

 

So in between the GST and the Income Tax, businessmen can only survive if they have a large cash reserves and also depend on the type of businesses they are in. Most businesses in Sabah face cash problem daily as SME and some businesses would go out of business if the consumers do not patronise them regularly and daily as the impact of GST and the price increases thereof deter many to spend extra and there go the danger to the economy in general...and so GST is Government Shut Through..

 

GST is better in a growing economy and now we enter a shrinking economy for the consumers... 

1. GST -zero rated in Sabah

Second update : 13/10/13

As far as Sabah is concerned, even if it is ZERO rated for GST, the prices of goods and services would likely to go up because there are many components already effected by other price rises especially products and goods imported including items from Peninsula Malaysia.  So how would Sabahans fare as end consumers?  Joshua


Updated: 13/10/13
http://www.blogger.com/blogger.g?blogID=5324408738746903480#overview

 Profligacy of at least RM30 trillions since 1957/1963 and still ongoing (also see all Auditor General's Reports especially the recent ones) is making Malaysia a really BANANA republic if GST (Government Shut Through) is to be introduced just to reduce the "sick and dead" deficit likely to be worst when other nations would not even take Malaysian Bonds.  While we are all worried about Government Shut Down (GSD) in the USA, Malaysia is sure to see bankruptcy across the board for all businesses if GST as it is to be introduced with BAD faith and BAD motives when the Government of the day really does not know what it is doing except be involved with thugging, thiefing, robbing of the activities of CRIMINALS.  GST or Value Added Tax (VAT) had been proven to be an asset in most countries especially in industrial countries with value added in productivity and proper implementation but in Malaysia it is Government Shut Through for its incapable to implement GST after so many years of talking when Malaysia is simply sliding to oblivion.  

One question I want to ask - How many accountants in Malaysia have hand-on experience of VAT or GST in England - one of the first countries to implement VAT? I had done at least three years of VAT services in the late 1970s and this service and experience is invaluable.  Joshua   13/10/13








The purpose for GST or VAT is not to reduce fiscal DEFICIT but to improve the general well being of all if properly implemented and ZERO RATE for Sabah...and of course if done smoothly in good economy scenario, the CRIMINALS in government may collect more revenue or go the way awry as usual with BN=Barang Naik for Be End devils -- Joshua

GST in Malaysia 2013 or later?

Would the Budget 2014 include this item Goods and Service Tax (GST) or also known as Value added Tax (VAT) generally?

While Malaysia had been implementing the Service Tax for almost 20 years, it is indeed a bit too late and too difficult to implement the GST in 2014 or 2015, 0r 2016 as the economic scenario does not really permit it to bring the expected benefits to the nation.

GST at this point in time when Malaysia is facing increasing deficit and cash outflows and Malaysia is having more than 2Malaysia in terms of development with the lopsidedness inevitable from Kedah to Sabah in the context of urban vis-à-vis rural for each state concerned.  When GST at one single system for the whole nation, the existing disparity would worsened beyond recognition.

The whole system of handling prices and prices increases would result in chaos for the consumers largely on fixed income would not be in the position to cope with sudden price increases in most items including essential items which maybe zero rated or exempted from GST.

The immediate consequence would be many consumers cannot afford to spend as prior to GST as at the present moment many already finding themselves with declining consumption.   When consumers cannot afford to spend, how can most of the businesses be conducted normally and could result in dwindling business with likely imminent closures if the consumption remains stagnant for some weeks or months especially in those businesses needing daily trade to be sustained.  So it is likely a vicious circle for the economy going stagnant in most sectors. 

The other problem is that when GST is first to be introduced in the present economic climate, the traders would up their prices as a natural response in the face of uncertainties of input price rises.  That would be a good thing if the economy expands but what would happen if the economy shrinks?  Even with 20cents subsidy withdrawn for petrol, the retail prices in most items were upped with significant adverse impact for the purchasing power of the consumers.

How would the nation deal with this scenario especially in Sabah with very little industries?  Is Palm oil – the major item for Sabah production as a vegetable oil an essential item be zero rated?  But Sabah does import processed cooking oil from palm oil factories in Peninsula and surely this selling price would be increased because the factories maybe facing increasing costs it their production of palm oil.  Cooking oil is an important ingredient for catering etc hence consumers would have to pay more for the food.

For Peninsula Malaysia, only a few states like KL, Selangor, Penang are industrial states while the other states are less productive in industrial items.

GST is most beneficial for industrial activities and Sabah is not an industrialized state.  So Sabah would face imminent disaster of a scale unknown at the present moment. 

It was indeed a very surprise that Jala decided on 7% GST for the nation and expected to collect RM7 billion extra in GST a year.  This figure may seem impressive on the face of it but the associated disaster not considered for Sabah could be precipitated almost immediately mainly Sabah depends on the imports from Peninsula factories whose prices would be increased possibly substantially for Sabah.

The problem is that once the GST is implemented at a high rate, the imminent damages to the economy and welfare of the consumers could not be reversible?

So the big question in Malaysia very much dependent on USD and trade with USA now under Government shut down could be into insolvency with the worst impact on Sabah –very much a neglected state in all areas.  

Other questions are as follows:-

1.                   So have anyone done a fully researched paper on how GST at various rates impacting Malaysia vis-à-vis Sabah

2.                   The minimum wages for basic workers to survive depending on the rates of GST?

2.1                  If wages need to be increased, how much would be sufficient?

3.                   The level of prices increases especially for the essential items depending on the GST rates?

4.                   Would fuel attract GST?  If so how would this impact the economy as rural Sabah would be hard hit?

5.                   Would houses attract GST and if so how the prices go up especially those houses under construction when all raw materials would go up in price too?

6.                   While GST inputs and outputs would be offset in a two or three month cycles, how would such cycles affect the cash flows of the businesses?

7.                   At the moment, Service tax collected in Sabah is retained in Sabah and would GST be retained in Sabah and if so how much would likely be retained in Sabah possibly to bring reliefs to some sectors?

8.                   If GST collected in Sabah is retained in Sabah, would there be a restriction that such increased amount be disallowed to be applied for development projects unrelated to trade for matching purpose?

9.                   If GST is implemented, all existing taxation like corporate and income taxes would be adjusted downwards and how would this be addressed with the initial burden of GST?

10.               It maybe inevitable that black market would thrive once GST is implemented and is there any acceptable level before the disruption bites into the economy?

11.               Corruption for the implementation agency can be a factor and is there any provision for this to be thwarted?

12.               For Sabah is there a model for GST given the prevailing economic indicators at various rates of GST in the context of productivity and consumption and the level of risks that the economy can be adversely affected with hardship for most people especially Sabah people are already finding it hard.  If there is no model done, then Sabah should not see GST in the immediate future.

[NB:  these questions are not exhaustive]

Conclusion:-

Previously I had advocated that GST rate for the nation is 2% to enable acceptance to over ride teething problems.  For Sabah I would call for zero rated or not exempted so that Sabah can still claim for the re-imbursement of the GST paid by the importers of goods from the peninsula factories.

I have done my piece and would invite others to play their parts in whatever capacities they are capable.

Thank you,

Joshua Y. C. Kong

Hand-on experience in UK VAT in 1970s.