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.

Signs of a U-Turn up ahead…

And the announcement didn’t come from the Finance Ministry. Curiouser and curiouser…

Race off all official forms? Not quite yet…

Because the service tax license application form (electronic form at the very least) still requires “Race” of the board of directors of a company to be specified… from a very extensive list. Nevertheless, it’s still there.

The Manglish Finance Bill

I just had to add this. The freakin’ Finance Bill is bilingual. Here’s an extract of what is virtually the kind of language hopping you get to see in every page of the Bill…

4.  Akta Cukai Pendapatan 1967, yang disebut “Akta ibu” dalam Bab ini, dipinda dalam seksyen 2 dengan memasukkan selepas subseksyen (8) subseksyen yang berikut:

“(9)  Any reference in subsection 107C(4A), paragraph 2A of Schedule 1 and paragraph 19A of Schedule 3 to a company which has a paid-up capital in respect of ordinary shares of two million five hundred thousand ringgit and less tat the beginning of the basis period for a year of assessment shall exclude a company which is established for the issuance of asset-backed securities in a securitization transaction approved by the Securities Commission.”

Must be a 1Malaysia thing… the Education Ministry promotes language changes every decade or so, so should everyone else.

Painless Budget?

That’s what the Finance Minister called it. But was it painless? Let me count the ways…

1. Service tax on credit cards (yearly) – …. wait for it… payable upon issuance of the card! Imagine this scenario: You get an envelope in your mailbox and the letter says a bank has sent you a free for life credit card. But then, oh by the way, they’ve charged your card with RM50 because its a tax. Scenario 2: You work for a bank. You are issued a card by the bank because… well… you work for the bank. Your bank wants to ease the pain by bearing that tax for you. But then, it becomes a taxable perquisite to you and you get taxed on the freakin’ tax borne by your freakin’ employer just because the freakin’ government decided a piece of plastic has a RM50 tax! Every year!
2. RPGT – First, the Budget speech said it’s 5% on gains, to be implemented by the purchaser withholding 2% of purchase price. Then, the freakin’ Finance Bill came out and virtually said, “It’s the scaled rate that RPGT used to be at, only worse… the lowest tax ain’t 0% anymore, its 5%!” Which was why one of the Big 4 firms then said that the tax is a “knock out punch”. But then, FM2 aka Husni announced in the news that, “It’s not the scaled rate! It’s 5% flat!” So, now we have a limbo of a tax because someone got the drafting of the freakin’ law wrong. Oh yeah… one other thing… when the purchaser is in doubt on whether the seller is getting capital or revenue gain, withhold first. Let the seller go convince the government about the nature of their gain, if any.
3. Reduction in top scale individual tax from 27% to 26% – Amazingly, the speech refers to our top scale rate as the middle income group. I don’t know about you, but I feel insulted.
4. Personal relief on EPF contribution and life insurance to be increased from RM6,000 to RM7,000 – … gotta wait for this one also… BUT that RM1,000 is only applicable to premiums on deferred annuity schemes entered into after 1 January 2010. Okay, I haven’t a clue what that is… which means I have to go find out. Which makes it so “painless” a Budget for me.

No doubt there are some good news in this year’s Budget for some. I’ll get back to you on that later. Busy answering badgering calls from the credit card department.

The old man is right…

After yearly fiascos like this, I think the old man has a point.

The Unhappy Happy Hour

And so much for announcing it.

The Opposition’s Budget

I won’t bother to analyse this point by point due to the following reasons:-

1. You can read it for yourself… it’s in plain English.
2. It’s 106 pages long (imagine the number of glasses of water the poor Finance Minister has to gulp down, not to mention while standing in Parliament and reading for a couple of hours at least!)
3. Most of it is just dissing what the current government has done.
4. It’s very “opposition”… and by that I mean if DAP (as opposed to PR, because if PAS had a part in preparing this budget, you’d… cough! Islamic incentives… cough!… know) were to helm the federal government today, their Budget will never (should never) sound like that (because they’d then be dissing their own federal government and giving more autonomy to state governments).
5. Some of their proposals feel very leftist… especially the bit about “sharing risk”, where it sounded more like,”if SMEs fail, we’ll work out a way to save them with the banks”. I’m all for giving power back to the people/ more opportunities for the smaller players kinda leftish government… but saving failing businesses is pushing it a bit too far, I think. Just a tad uncomfortable for the pro-competition-better-for-the-consumer side in me.
6. Some of the proposals are pretty radical (one, at least, is recycled from last year), so operationally, I don’t think our current institutions, like the Inland Revenue, are equipped to administer the changes proposed, let alone understand what they mean. Even if they can, I suspect the cost of changing the operational procedures and awareness campaigns will just wipe out the funds allocated to the objectives before they could even start… (I have that much confidence in our tax authorities. Sue me.)
7. I didn’t have the time to read beyond page 57.
8. I really do have work to do.
9. Even if I don’t, there’s other more interesting news to read today courtesy of a rather interesting weekend politically.
10. I’m in my lazy patch. Now, go read it for yourself!