11. An ugly move to backlash

Malaysia

Putrajaya to absorb GST for drugs in public hospitals, says minister

How much and how long this "exemption" can be enforced?  Joshua

Malaysia

Putrajaya to absorb GST for drugs in public hospitals, says minister

http://www.themalaysianinsider.com/malaysia/article/putrajaya-to-absorb-gst-for-drugs-in-public-hospitals-says-minister

BY YISWAREE PALANSAMY
November 08, 2013

Putrajaya will absorb the cost of Goods and Services Tax (GST) imposed on drugs in public hospitals, Health Minister Datuk Seri Dr S. Subramaniam (pic) assured today.
He said that the healthcare services had many sectors within and not all are exempted from the GST except for services offered by the government.
"Even if the hospitals have to pay more for the drugs, this will not be passed on to the patients," he said in Putrajaya today.

Dr Subramaniam said that it is the private sector healthcare services component that needs more discussion.
"This is the issue we are now discussing. How to manage them (private hospitals) in relation to GST... we have to look at the best modules," he added.
The Segamat MP said he was also willing to have a discussion with DAP national publicity secretary and Petaling Jaya Utara MP Tony Pua over the matter.
"Tony Pua was referring to private hospitals, which is what we are also currently discussing about but I am willing to see him anytime to have a talk... we are open to it," Dr Subramaniam said.
"I did not say what he (Pua) said was wrong. He was talking from a factual point of view."
Pua had called Dr Subramaniam as "either ignorant or chooses not to be truthful" about what GST-exempt healthcare really means, explaining that a GST-exempt product or service merely meant that the consumption tax would not be imposed by the provider to the consumer.
He added however, that hospitals were still required to pay GST for all products and services they buy from their suppliers.
In a statement, Pua also gave an example of a hospital that buys a drug from the medical supplier for RM50 and sells it to the consumer for RM55 based on a 10% profit margin.
He said that when the GST kicks in, the hospital would have to pay the supplier RM50 plus 6% GST, amounting to RM3.
"If the hospital were to maintain the price of the drug to the consumer, then the hospital would only be making a profit of RM2 or a 3.8% profit margin," he said, adding that Dr Subramaniam was wrong to think that hospitals would absorb the consumption tax.
Dr S. Subramaniam, however, admitted yesterday that healthcare will be affected by a 6% GST but promised to minimise the effects and ensure affordable medical services.
This contradicted his assurance to Malaysians on Monday that healthcare was exempted from the GST, which will be implemented on April 1, 2015.
"Please be assured that the Ministry of Health will continue to play a proactive role in minimising the effects of GST on essential health services so as to ensure that all Malaysians, particularly those in the low income group will continue to have access to affordable healthcare," he said in a statement issued in Putrajaya.
He said that he was also continuously engaging with the Finance Ministry and "looking into all possible angles on how this can be achieved". - November 8, 2013.

10. Another ingredient to price hike

This is going to work against the immediate benefit of GST if GST is any good in the prevailing economic decline?  When GST at 6% is implemented, such increase would be another layer to make the poor harder to survive.  Joshua

Higher power prices likely early next year

The Malaysian Reserve | November 8, 2013

Electricity could rise as much as 19%, from 33.5 sen/kWh to 40 sen sen/kWh, early next year when the government cuts fuel subsidies for power producers.

By  P Vijian
KUALA LUMPUR: The government plans to cut fuel subsidies for power producers in the first quarter (1Q) of 2014, to trim soaring subsidies for the energy sector which touched RM24.8 billion so far this year.
Electricity could rise as much as 19%, from 33.5 sen/kWh to 40 sen sen/kWh, if all the subsidies are removed, according to estimates.
Loo Took Gee, secretary-general to the Ministry of Energy, Green Technology and Water, said the reduction in fuel subsidies for the power sector is essential to stabilise the economy.
She said the government consulted stakeholders in the energy sector and a new power tariff rate would be announced next year.
“You can expect it in the 1Q of next year, so be prepared for it. We need to stabilise our economy and this is one way,” Loo told The Malaysian Reserve in Petaling Jaya.
Loo, who participated in the “Reforms in Peninsular Malaysia’s Electricity Sector” forum organised by the Institute of Strategic and International Studies in Kuala Lumpur yesterday, said fuel subsidies had to be reduced gradually, taking cognisance of the country’s fiscal condition.
Loo did not say how much more power producers will have to pay for fuel to generate electricity with the subsidy reduction but it is inevitable that Malaysians will pay higher for electricity.
“Everybody must use energy judiciously and prepare ourselves for an increase in energy cost because we have been receiving huge subsidies all these years,” she said.
Based on estimates, Malaysians may have to pay 40 sen/kWh, compared with the current electricity price of 33.5 sen per kWh, when subsidies to power companies are cut.
The cabinet last revised electricity price in June 2011, with a 2% increase in base tariff and before that power rates were reviewed in 2006.
The government had previously signalled that it will cut the natural gas subsidy for the power sector because of rising costs. The power sector buys gas at a subsidised price of RM13.70 per mmbtu, compared with market prices that are three times higher.
The subsidy rationalisation is also the first move towards market-based prices as well as a plan to introduce a fuel-cost pass through mechanism so that consumers pay higher or lower electricity prices according to the market.
Under this plan, which is already in place for petrol and diesel, the fuel cost would be reviewed every six months.
Subsidy removal for the sensitive energy sector is part of Prime Minister Najib Razak’s fiscal consolidation agenda to trim worrying fiscal deficit and send a strong message to global rating agencies that Malaysia is firm on its budgetary reforms.
Malaysia’s fiscal deficit is at 4% of the gross domestic product (GDP) and national debt is expected to touch 54.8% of GDP or RM541.3 billion this year.
Najib reduced the fuel subsidy for petrol and diesel by 20 sen per litre in September. By reducing the subsidy, the exchequer will save about RM1.1 billion this year and RM3.3 billion annually.
This was followed by a 34-sen sugar subsidy cut in Budget 2014, announced on Oct 25, where Najib also introduced the Goods and Sales Tax (GST).
The GST, slated to begin on April 1, 2015, is expected to generate RM23.1 billion in the first nine months and RM32 billion in 2016.
This content is provided by FMT content provider The Malaysian Reserve

9. to the point on an item

Honestly speaking, how many small businesses in Sabah depend on the rich and they depend more on the working class or middle/low income groups to be sustained in business and when many the low income groups cannot afford to patronise those sme businesses, they would go out in biz within 6 months and the CRIMINALS in Government could not be bothered and they also do not know how to save those sme businesses going bust...and brim is inadequate to do any thing to salvage bankruptcy as sme bosses have other financial commitments too..so there go turmoil in Sabah with 6% and that is why I call for zero% in Sabah like Labuan till 2019.. and also when many shops close down, it would affect tourism..so much for Sabah to be dependent..and a balancing act is indeed needed.

8. some good points but cannot claim input

http://www.theborneopost.com/2013/11/03/no-gst-for-duty-free-labuan-mp/

No GST for duty-free Labuan – MP – BorneoPost Online | Borneo , Malaysia, Sarawak Daily News

No GST for duty-free Labuan – MP

by Adrian Nandu. Posted on November 3, 2013, Sunday

LABUAN: Labuan Member of Parliament, Rozman Isli said the island will not be affected by the Goods and Services Tax (GST) implementation due to its duty free status.
Nevertheless, the policy was better than the Sales and Services Tax (SST), he said on Friday after meeting with members of the photography fraternity here.
Rozman said some 160 developed and developing countries worldwide were using the GST system.
“The GST is good as it will avoid cascading tax and it is more fair where the prices of the goods should be cheaper, while the tax system is more transparent compared to SST.
“When GST is implemented, income and corporate taxes will be reduced, making our country more competitive,” he said.
He said further that Malaysia would start its GST rate at 6 per cent where Singapore was at 7 per cent, while the rest of the countries in Asia were at 10 per cent.
“This new tax system is part of the plan to achieve our goal to become a high income nation. Through GST, national revenue will increase and we will have funds to build many other facilities such as schools, hospitals and others,” he said.
When asked about the issue of cabotage policy that has been often blamed for the rising cost of goods in East Malaysia including Labuan, Rozman agreed that the policy should be abolished for the benefit of the people in Borneo.
Meanwhile, he disclosed that some other road projects would be implemented here soon.
“The first is the road to link Pulau Enoe to Kinabenuwa and then another to link further to Kampung Sungai Bangat. It will reduce traffic congestion at the town and this new road will open up a new industrial area.
“The second is the road from Saguking to Kampung Batu Arang. This project has been approved by the government and will be implemented by the end of this year.
“We have also asked for a new road to be paved from Tanjung Purun to Kampung Nagalang,” he said.
He disclosed that he planned to build a marina city here which would be equipped with tourism products such as a theme park, residential areas and many more.
He said he was also committed to building an integrated port and bridge to connect Labuan and Sabah.

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7. A general view but not for Sabah?

Sabah would be worst off with GST at 6%... Joshua

from Malaysiakini - free- thank you. for reference here..  Joshua

New income tax structure savings won't offset GST

Aidila Razak 7:47AM Oct 29, 2013

Savings that households stand to make with the introduction of the new income tax structure proposed in Budget 2014 are not likely to offset the amount paid when the Goods and Services Tax kicks in beginning April 2015.

However, according to Chartered Tax Institute Malaysia president SM Thaneermalai, this is to be expected as the government would not have introduced the GST, unless it meant more revenue.

"We must accept that by introducing the GST, the government will be making more in tax revenue," Thaneermalai said when contacted.

Malaysiakini estimates that for some income brackets, the amount of GST to be paid annually can be almost three times the amount of savings made under the new income tax structure, depending on the income level.

Using consumption data published in the Bank Negara Malaysia 2012 annual report, it can be extrapolated that those in the middle income - the RM4,000 to RM5,000 a month income bracket - may pay around RM200 to RM260 in GST per month.

This means they will pay between RM2,400 and RM3,120 in GST annually, but only save RM1,050 under the new income tax structure.

However, this does not take into account savings that may be made from the scrapping of the sales and services tax. The government argues that some goods will be cheaper as a result.

This also does not take into account food items such as meat, fish and vegetables, which mostly have zero GST. However, Bank Negara estimates that a great bulk of spending by those in this income bracket is not on food.

In addition, those in the RM4,000-RM5,000 bracket pay more GST, as a proportion of their income, compared with those earning higher than RM5,000 a month.


Likewise, they will pay less GST as a proportion of their income, compared with a person earning RM4,000 and below.

The same finding was found by Penang Institute fellows Lim Kim Hwa and Ooi Pei Qi in their study published earlier this month.

Although their research used a GST rate of seven percent - one percent higher than that proposed by the government last Friday - a similar pattern can be found with GST at six percent.

Who to pay the most GST?

Using the Department of Statistics household expenditure survey, the Penang state think-tank also found that these households with the following profile will pay a higher GST as a proportion of their income:

• Single person
• Young (aged less than 24 years old)
• Bumiputera
• Clerical workers, skilled agricultural and fishery workers

By the same measure, households that meet the following profile will be the largest contributors to the government's GST revenue:

• Chinese-led households
• Head of household aged between 35 and 44 years
• Professionals, managers, senior officers and legislators

Meanwhile, Thaneermalai pointed out that in the initial stages, the middle and lower income groups would be beneficiaries of about RM5 billion in welfare aid and tax breaks to cushion the GST blow.

"The estimate revenue from GST at six percent is RM8 billion, but we cannot forget the reduction in income tax, tax breaks for those earning RM8,000 and below, the expansion of the Bantuan Rakyat 1Malaysia and the RM300 additional one-off assistance to those already receiving BR1M.

"For 2014-15, the government will be paying roughly RM5 billion, bringing the (initial) net effect of the GST to about RM3 to RM4 billion," he said.

Thaneermalai said what people needed to accept was that government would not put everybody through the pain of the GST if it did not mean more money in the coffers by implementing it.

"So, on the revenue side, things are looking better for the government but it will have to watch the spending side," he said.

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