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Sakmongkol ak 47

Monday 5 May 2014

The PM explains GST

I said it earlier that one of the unspoken reasons for having GST is to catch out the tax evaders. In parliament, BN MPs liked to talk about how efficient GST is. How it can raise revenue for the government. Never once in parliament did any one of the BN people talked about how GST can be used to nab the tax dodgers.
The UMNO people have even gone one step further- by claiming that the majority of the tax dodgers are Chinese. The Chinese are therefore engaged in activities denying the Malay led government of funds which can be used to better living conditions of the Malays. UMNO cannot abandon any racist undertones in any of its policies.
The government knows who the tax dodgers are.
They have files on them. The question is why haven’t actions been taken against them? Is the government protecting some of the bigger culprits? Tax evasion constitutes a drain on government’s income. So do illegal transfer of funds, illegal lotteries, embezzlement of public funds which are reported year in and year out by the Auditor General; corruption and plain overpricing constitute further leakages. Government purchases and spending on brainless projects construe a big drain on government coffers.
The reason why this government is using GST to plug the leaks, because it thinks no one can escape paying consumption tax. They must consume and therefore cannot run away. GST is like the dragnet, mopping up everything in its path.
Except of course the tax dodgers themselves- they will find ways to escape. The illegal bookies, the underground and parallel economy will continue to prosper and laugh at the stupidity of the government. Illegal transfer of funds- all those ill-gotten gains obtained through unreported cash transactions, the commissions earned will continue to escape the government dragnet.
The government should have acted firmly against tax dodgers. They know who they are. The kepala ikan restaurants, the Malay owned firms, the Chinese business mandarins, the heavenly kings, the operators of illegal lotteries, businesses which ought to be taxed but not- if the government knows their identities, why didn’t they go after them? Why use GST as a pretext to punish the collateral sufferers- the people and fixed income earners who will end up paying for dearer goods and services. Najib has got it wrong. And now even the poor men of god, the imams and muftis are shamelessly joining the chorus exhorting people to accept GST.
The BN government can settle the score immediately; by opening up all the files on the tax evaders and make them pay. The government knows who they are but are in cahoots with tax evaders. NAZA motors for example have not been paying due taxes , but each time their files comes up for review, there will instructions from the top to keep the files back. What about the other big guns? Ask the IRD to reveal who are the tax dodgers and get the government to take action on them. The banks? The corporate players? Check all of them.
Now where does PM get the notion that the majority supports GST? Which majority? The majority who actually voted in GE13 did not support BN. now BN is coming out with a disastrous policy aimed at increasing their coffers because they have not be able to spend within their means and expect it to be supported by the 53% of the voter population who did not vote BN. the majority was represented by those who came to the Bantah GST 501 rally last weekend.
PM doesn’t understand it- the reason why so many people don’t pay income taxes is because they don’t have enough income. Small income families send children to study because for them that is an escape route from grinding poverty. They sell whatever they have. Elder sisters sell their bodies to finance younger brothers and sisters. Malay girls work as GROs to help families back home. Kampong folks sell land which they have only TOL as consideration to trade.  So the reason why only slightly more than 1 million pay taxes, is because the rest don’t have enough income.
Will the PM now finally acknowledge that one of the reasons why we will have GST is to use it as dragnet to scrape everything in its path? The main and only reason they are doing this is because they have run out of money to finance their reckless spending? And also because it is now more difficult for the government to borrow because it has not shown financial discipline? They want more money to finance their operations?
Who says the GST is progressive? The fixed income and salary earners will pay a higher proportion of their given income on GST. This is what makes the GST regressive not you pay more tax as you consume more. Even this simple feature is not understood by the PM.
RM100 allocated to GS by a person who earns RM1500 month is not the same as RM100 allocated by a person who earns RM10, 000 monthly. Unless the government is prepared to implement multilevel GST. Impose higher gst in higher income group. 6% paid by a person who earns RM1500 and the same by another who earns RM10, 000 does not produce equitable effects. Remember its 6% on the goods and services not on income.
Consume less la- is the knee jerk answer by BN. make your own foodstuff and things you need. These kinds of answers ought not to be given by lawmakers. The BN government blames the people for its failed policies.
The PM has not been sharp enough. He is still using the clich├ęd argument that because 160 countries used GST, then it must be good. The country which Obama came from which is also the most powerful economy in the world does not use GST.  The main reason why most of the 160 countries want GST is that each of them want more money in their own pockets. The tin pot despots and dictators want more money to install gold toilet seats and gold taps. Some other countries want more money to finance their very organised welfare policies on housing, on health, on cash payments to the needy.
Let us remind PM Najib that the purpose of a tax system is to redistribute wealth and not fund the functions of the federal government. The government must take steps to ensure tax dodgers are caught and be made to pay.


Anonymous,  5 May 2014 at 17:09  

Tax just make people suffer and paying more.

How come is good for people???

If the gov sincere to save money to cut down corruption, inflated contract price, deliberate mismanagement..looting...subsidise cronies companies...etc....there are plenty of money!

Anonymous,  5 May 2014 at 17:59  

I would want the government to implement GST. Then the Malays, who carry three kids on their motor cycles,survive on sardine and keledek leaves, will turn against UMNO and bring it down to its knees and to the Opposition bench.

bruno 5 May 2014 at 20:30  

Dato,out of the total population of 30 million and a few million foreign workers,we can safely say that there is over 20 million working in Malaysia.

Out of these 20 over million workers only 1 million pay income taxes.So GST is to tax these 20 million who do not pay any single cent in income taxes.If the gomen cannot eat the powerful and bigger kois,then they will go after,chase and eat the minnows.

A hungry cat will remain a hungry cat until it's stomach is full.Then when it is hungry again,it will go out looking for the minnows again,again and again until there is no more minnows left.Then it will go and look for other prey.

Anonymous,  5 May 2014 at 21:28  

Anonymous 5 May 2014 17:59

I am with you. Let the people suffer first, then they know!

OneMalaysian,  5 May 2014 at 22:27  

Dear Sakmongkol

The GST is not designed to close tax loopholes. What the GST is designed to do is to cast the tax net wider to catch everyone, including those with very low incomes. In simple terms the GST is a more efficient way to collect MORE taxes than the current sales and service tax. It is like a very wide trawler net that catches everything, against the current casting net. How much more will the GST collect? Just RM6 billion more.

The budget deficit in 2013 was RM44 billion or about 4.5% of GDP. So this RM6 billion extra is just a small percentage of the deficit. Besides, BR1M will suck about RM4 billion away, so only RM2 billion would be available for narrowing the deficit. Now consider the estimate made by several parties that government wastage through negotiated tenders, cronyism, poor purchasing decisions as highlighted in the Auditor General’s annual reports are about RM30-40 billion per annum. So why isn’t the Najib government acting on the AG’s report and instituting better procurement policies that will INCREASE revenue by RM30-40 billion? Why impose so much hardship on the bottom 40-50% of society just to raise an additional RM2 billion? And isn’t is ironic that the government is giving BR1M with one hand and with the other take it all back?

This is not to suggest that the GST is not an efficient tax, or that Malaysia should not introduce it. The point is why don’t the government exhaust other revenue enhancing steps first? Secondly, GST is only appropriate in countries with a vast middle class and where the majority of the people have similar incomes, such as western European counties. In such countries a GST will hit everyone about equally because their incomes are not very different and they have high consumption patterns. In our country the income gap is very wide, and since the poor consume all their income (in fact they borrow as well) this means that 100% their income is subject to GST. On the other hand the rich may save 70% and only consume 30%, meaning GST applies only to that 30%. So GST is very regressive i.e. hit the poor harder than the rich.

Finally, let’s remember that in every country GST rates go up with time simply because governments tend to over spend. Hardly have we heard of GST rates coming down. So 6% is just a starter. Unless this profligate government can spend within its means and run things more efficiently, worse things will befall the poor in our country. What a prospect! Good luck to those who think the government is doing the right thing.

Anonymous,  5 May 2014 at 23:20  

Spot on Dato. This idiotic UMNO/BN government lead by the clown Najib is a big disgraced to our country. Pooi!

Anonymous,  6 May 2014 at 07:48  

Dato, we know Najib very well. He is up to his usual trick (which he is internationally certified and famous for) again when he said that the majority supports GST. They are meant for Utusan to publish.

The simple fact is that the gravy train is now empty and need GST to replenish it.

On a hilarious note, I would suggest that DAP propose a Corruption Tax which are ONLY to be used as the nation's reserve. Otherwise, this would also be gone.

Anonymous,  6 May 2014 at 10:01  

"Eat more kangkung and RM1 chickens! Be patriotic and pay your GST! Onward to developed nation status by 2020. Malaysia Memang Boleh!"

UMNO (United in Making our Nation

Phua Kai Lit

Anonymous,  6 May 2014 at 17:26  

I suggest Dato propose to the bn dudes to get rid of all subsidies asap. More spending money to ah jib and gang. No need yo give brim, bantuan skolah etc. Then we will what will happen in next GE. Bloody malaysian need to suffer badly first only then they know how to react.

Anonymous,  8 May 2014 at 10:40  

Kalau di Siam Najib ini sudah lama di halau. The biggest tax dodgers are the corrupt BN politician and their kerabat and cronies led by Mahathir, Najib , Daim etc...

Anonymous,  8 May 2014 at 10:45  

Itulah Najib. Bapanya hantar belajar sampai ka UK tetapi habis membuang masa berpoya2 dengan girl friend Tioghua nya. Sekarang hanya pandai menipu.

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