Woohoo! But…

Everyone sorta knew this was never really gonna work, what with the problems and issues everyone’s already having with the implementation of a ‘simple’ tax like GST. Which is why I’m glad someone up there came to their senses… or caved in to public pressure… matters not now.

But this latest “shelving” does beg the question: Are they going to shelf the big one too?

That book rebate’s gonna have to be changed…

I heart this.

The job most likely to get a raise in 2010!!

Read and weep.

Where’s the English Bill?!

It’s 7pm and the Parliament website has (for several hours) displayed the Malay version of the GST Bill, but still no English version. Rumours aflying are ranging from “this is the quality of our Malaysian IT services” to ”the document (that really matters cause who reads Malay bills nowadays) is still officially a secret (OSA-ed)”.

Getting GST is like getting a root canal treatment

It’s painful. But it’s necessary.

There have been too many responses on the proposal for GST ever since GST was even mooted in the country some two decades ago. Recently, it has gathered steam, though I feel, through quite a bit of misleading from the Opposition parties looking to score a few low-punching points at whatever the current federal government proposes. So, I feel it’s time I give my two cents.

GST is a broad-based tax (when administered properly) imposed and based on consumption. Why is this good? A broad based tax will ensure that all are treated equal. This means no preferential treatment for anybody or anything, no matter your party affiliation or race makeup. If you have the means to spend on it, you have the means to pay this tax to the government for that spending.

Where the Opposition parties have issue with, should have been compartmentalised as a separate issue, I think. Despite their misguided way of marketing their message, I do agree with their principles. Deal with corruption and the way the taxes collected (however they’re collected) have been siphoned off and/ or not used according to how taxes should be used. That bit - I agree with – but should be dealt with as a separate topic.

This topic is about the introduction of a tax which should replace the awful and easily abused systems of service and sales tax we currently have. GST should and would also move the emphasis of tax collection to how much one spent rather than how much one earned, which is the basis for the income tax we all complain about every year. How is that good also? Much have been said about the poor and the middle income class who suffer from governmental fiscal policies and the fuel price hikes. Well, the poor don’t spend as much because they are poor. So, by applying the rule of thumb of a consumption tax, they pay less tax. Like it or not or know it or not, the poor are already paying tax everytime they acquire something – it’s in the manufacturer’s pricing when they pay for their sales tax, it’s in the importers’ or dealers’, middle man’s and retailer’s pricing when they get the customer to pay for service tax, excise duties and import duties. The worst part is, these taxes and duties as they are, are cummulative. That means that when the middle man buys from the manufacturer, say a computer part, he has to pay the sales tax which is priced into that product by the manufacturer. When the middle man or vendor sells this to the retailer, any service tax payable, say on installation, would be priced into that service. The retailer who then provides, say a mobile phone service to you and me, charges another round of service tax on - guess who? And how much tax do you and I think we’re paying for that service or product really? 10% + 5% + 5%.

Enter GST. When administered properly (I did say that), that tax would only be a tax on the value added portion of the product. In other words, when the final consumer finally pays that 4%, it really is 4% of the price we pay - all things working as per the theory of the tax (I just had to qualify that in case our government get’s the Malaysia-Boleh license to be creative).

So, I’m just saying. Don’t be judgemental until you have all the facts. Heck, for all I know, if they frame the tax to apply to a finite number of products or services, we’ll be back at square one. But don’t be sold so easily on the anti-BNness just because your Opposition MP says it’s bad. It may not be so bad.

Now, let me address this before I forget. Why is getting GST likened to getting a root canal treatment, besides the fact that it’s painful and it fixes rotting holes. The system has to be broad based (I did say that already also). That means that every manufacturer, vendor, middle man, importer, seller, retailer and even employees, have to get their heads (and systems) around the way the tax works. That bit, can be expensive – like a root canal treatment. That is the only bit which I think would contribute to a slight bump to the inflation figures (despite my not agreeing to the way inflation is calculated). Once that is over and done with, the pain in the tooth (and the current consumption tax regime) should be gone. Unless, of course, your dentist sucks. Then, he might just buy a mansion in Shah Alam. Don’t you agree that should be a different topic altogether?

For those who already know this fact, there is also some bright side following the introduction of a value added tax or GST in every country. Don’t y’all wanna see if it’ll happen in Malaysia also? 2013 isn’t very far away.

First class infrastructure, third class… (fill in the blank)

They never learn.

When more than a few handful of taxpayers highlight the issues, that means, they are no longer isolated cases. When more than a few handful tell you your officers treat taxpayers like suspects rather than clients, there should be merit to at least investigate whether their statement is true, because it should no longer be viewed as mere misguided perception. When more than a few handful tell you your rules do not place value on the accuracy and correctness in the application of the law, but seems more driven with how much taxes can we collect this year and it should top last year’s RM64billion, regardless of whether the taxes are collected rightly or otherwise, take it as a massive HINT that there is something wrong with the bloody system! And by system, we don’t mean THIS system!

Can you tell I’m pissed?

Now the downturn is Tax’s fault

How?

Tax policies around the world encourage companies to utilise debt rather than equity.

That’s how.

Define the Dumb

On law

The law says the MACC cannot interogate witnesses beyond office hours.

The Dumb takes this to mean that complaintants cannot approach the MACC office to lodge a report on corruption beyond office hours.

The Dumber expanded the interpretation to say that the police stations should close by 5pm.

On policy

All government projects would be open to tender.

The Dummy who introduced this policy then allows one of his Ministries to wrap up RM15 billion worth of gifts in return for a RM625m “remuneration” paid by a 24 year old silver-spoon-sucker.

On tax

“GST – if introduced – would not be effected abruptly, but very gently”

So, maybe they would introduce GST while the sales and service tax regimes are still in place? I don’t know. I’m dumbfounded. Or maybe its just a Dumb statement to begin with.

Enter GST

Here it comes.

That 2% monster!

It seemed harmless at first sight; the proposal to “broaden the tax base… that tax at a fixed rate of 5% be imposed on gains from the disposal of real property” with a collection mechamism whereby the tax is collected through a withholding mechanism whereby the purchaser withholds 2% of the purchase value and pays to the Inland Revenue Board.

One month thereafter and one month before implementation date, here are some potential migraines to consider…

1. All purchasers of real property or real property company (RPC) shares will be required to withhold 2% of the purchase price and remit the same to the IRB when the purchaser is unsure whether the disposer is subject to RPGT on the gain, or whether the disposer has got a gain from the sale, or whether the disposer is gonna or not gonna file their RPGT returns.
2. Reread point (1). See any problems yet? RPC shares are shares in companies with at least 75% of their tangible assets being comprised of real property or RPC shares… now, do you see the problem?
3. Reread point (1). See another problem? Where the purchaser is unsure, just withhold and remit to IRB. Imagine this scenario… investment dealers, banks, insurance companies, brokerage firms, any freakin’ person deciding to purchase an entire business aka balance sheet etc will now have to be wary of the lock, stock and barrel they’re purchasing or the thousands of shares traded in case there are RPC shares there and whether they may need to withhold 2% of that purchase price and remit to the IRB.
4. Worse still, what about properties forclosed by banks for bad loans and mortgages? How would the “withholding” work? Has the bank “purchased” the property? How would the bank then have to get back the money they are trying to recover through an auction of the property on the basis that there was probably no gain to be taxed and that it should not even be taxed under RPGT in the first place?

And I’m sure there will be more. Those are just some I am able to pluck out so far.