DO WE REALLY NEED THE GST?

Posted by Unknown On Saturday, March 13, 2010 30 comments
At the recent forum on GST held in Penang, I learnt a few startling facts which made me do more research. Here are some fantastic facts and figures which will help us to decide - DO WE REALLY NEED THE GST? I make no apologies that this is a long post because of the volume of data I generated from researching the issues at hand. Please read it seriously and consider your personal response to the question.

logo designed by ~wits0~
~used with permission~ Thanks!

Fact #1
In 2009, the Federal Budget showed:

RM74 million spent on BTN
RM70 million spent on Parliament

Fact #2
2010 BTN budget : RM62 million.
2010 Parliament budget : RM66 million

Fact #3
2009 PM's Department’s Budget : RM14 billion.
2010 PM's Department's Budget : RM12 billion.

At THIS LINK, Malaysian Insider reported:

The Bukit Bendera MP Liew Chin Tong went to great lengths to point out that the Prime Minister’s department, in effect, actually runs a budget 200 times that of Parliament, a sign of “extreme lop-sidedness” in the country’s parliamentary democracy as the department is just one of 25 federal ministries."

“In the next financial year, Parliament is to employ 263 staff while BTN has 244 formal staff with an undisclosed number of ‘cadres’ and ‘volunteers’ operating task forces and ‘community services’,” exclaimed Liew. (The Prime Minister’s Department claims to have 29,005 positions.)

At the JASA website, I discovered the following statistics (translation for this data was unavailable at that site):

Pakej rangsangan RM60 bilion

Empat teras utama

Melalui bajet mini terbabit kerajaan telah mengumumkan peruntukan sebanyak RM60 bilion - hampir sembilan peratus daripada KDNK. Pelaksanaan pakej rangsangan yang bersaiz besar seperti ini adalah kali pertama dilakukan dalam sejarah ekonomi negara. Pakej rangsangan ini memberi tumpuan kepada empat teras utama, seperti berikut:

TERAS PERTAMA : Mengurangkan Pengangguran Dan Menambah Peluang Pekerjaan;
TERAS KEDUA : Meringankan Beban Rakyat, Terutamanya Golongan Mudah Terjejas;
TERAS KETIGA : Membantu Sektor Swasta Menghadapi Krisis; dan
TERAS KEEMPAT : Membina Keupayaan Masa Depan.

Pakej rangsangan kedua ini akan dilaksanakan dalam tempoh dua tahun iaitu 2009 dan 2010. Daripada jumlah itu, ianya diagihkan seperti berikut:

RM15 bilion merupakan suntikan fiskal;
RM25 bilion dana jaminan;
RM10 bilion pelaburan ekuiti;
RM7 bilion inisiatif pembiayaan swasta (PFI) dan off-budget ; dan
RM3 bilion insentif cukai.

Jumlah RM60 bilion ini diperuntukkan kepada empat teras seperti berikut:

Teras Pertama : RM2 bilion;
Teras Kedua:RM10 bilion;
Teras Ketiga RM29 bilion; dan
Teras Keempat RM19 bilion.

Daripada suntikan fiskal sebanyak RM15 bilion, sejumlah RM10 bilion adalah bagi tahun 2009 dan RM5 bilion bagi 2010. Jumlah RM10 bilion dalam tahun 2009 dibahagikan kepada RM5 bilion untuk belanja mengurus dan RM5 bilion untuk perbelanjaan pembangunan.

Saiz perbelanjaan ini memberi impak kepada peningkatan defisit Bajet Kerajaan Persekutuan, yang dianggarkan daripada 4.8 peratus kepada 7.6 peratus pada tahun ini. Namun, kerajaan yakin defisit ini akan dapat dibiayai daripada sumber dalam negeri, memandangkan tahap kecairan yang tinggi dalam sistem kewangan tempatan.

Fakta Angka

Dana-dana tambahan:

RM674j Subsidi elak kenaikan harga bahan makanan harian
RM700j Wujud peluang latihan dan penempatan pekerjaan di sektor awam dan swasta
RM200j Bina Rumah Mesra Rakyat
RM30,000 Pelepasan cukai faedah pinjaman perumahan RM10,000 setahun selama tiga tahun
RM5,000 Diskaun lupus kereta berusia 10 tahun, beli Proton Produa baru
RM10b Tambahan dana pelaburan Khazanah Nasional untuk tingkatkan pelaburan domestik
RM1.96b Bina dan menambah baik kemudahan 752 sekolah
RM200j Dana Pembangunan Automatif
RM480j menampung kadar tol tidak dinaikkan

It would be very helpful if we could have access to the finer details as to how the money was disbursed in the Stimulus Package and the extent of which it achieved success.

The rakyat NEED to know. After all, it is our money spent for our country, right?

I opine that instead of implementing the GST which is a regressive tax that will severely impact the poor, the government must implement economic reforms that can get our country back on track again. I humbly offer the following suggestions:

SUGGESTION #1

Introduce reforms to the way some leaders procure and sell government assets in order to ensure that the nation receives the greatest value for its resources. There has to be a complete revamp in crony concessions, if any. Currently, tariffs and tolls are increased but at the same time, so are subsidies to certain quarters. This does not make sense.

For instance, Malaysian Insider HERE reported:

Plus Expressways Bhd, provider of expressway operation services, reported RM1.624 billion in higher pre-tax profit for the year ended Dec 31, 2009, 7.1 per cent higher from RM1.516 billion in 2008.

Turnover was also higher at RM3.179 billion, 7.1 per cent higher from RM2.968 billion in 2008. Click HERE for more.



In July last year, MP Tony Pua made the following suggestions which I believe are justified in the light of the above report:

The DAP has proposed that the Government should buy back all shares of PLUS Expressways Bhd which it does not already own and take over its existing asset backed liabilities for the approximate amount of RM15 billion. This amount and more, will be recovered from motorists using the North-South Highway by maintaining the existing toll rates for a period of six years. Should PLUS be acquired this year, by 2016, toll will no longer be required to be collected on PLUS owned highways.

We have also proposed that highways such as the Lebuhraya Damansara-Puchong (LDP) with reasonable expropriation clauses be acquired from the concessionaires as per the terms in the concession agreements. It is estimated that the cost of buying back LDP will only cost approximately RM1.4 billion, including liabilities to be assumed by the government.

Critics have panned the above proposals based on the following reasons:

1. The funds needed for the acquisition of highways can be better utilised for other projects.

2. The acquisition of these highways which are largely in Peninsula Malaysia will anger East Malaysians who do not benefit from the funds used for buy-back.

Unfortunately, the arguments above only apply if the Government is not already spending more in terms of compensation to these highway companies. For example, toll compensation to PLUS amounted to RM655 million, RM698 million and RM731 million for 2006, 2007 and 2008 respectively. PLUS has 30 more years before the concession expires. Without even taking into consideration the direct toll collection from motorists, the Government's compensation amount over the next 30 years will exceed RM68 billion should the current toll rates be maintained, after taking into account the fact that PLUS is entitled to increase toll tariffs by 10% every 3 years.

Similarly for the LDP, assuming that toll rates are capped at RM1.60 and no traffic increase, it'll cost an estimated RM1.54 billion in compensation alone between now and the end of the concession in 2029. For both highways, it is clearly more economical for the Government to buy back these highways, allowing for more funds to be used for other projects, including those in East Malaysia.

3. There is no economic impact from money spent to buy back the highways, compared to spending them on “stimulus” projects

This will also prove to be a fallacy. The outcome of the acquisition of these highways, will mean increased in billions of disposable income for millions of Malaysians as a result of toll savings. The stimulus impact of such an increase will certainly mean a boost in domestic consumption which will benefit our economy at a time when foreign investment contribution to our economy is falling rapidly. Extra funds in the pockets of millions of Malaysians will therefore have greater stimulus impact than the billions ending in the pockets of a few via the extraordinary profits made by these highway concessionaires.

4. The Government will have problems raising the funds to execute the highway buy backs.

5. The buy backs will result in a higher budget deficit. Click HERE for more.

SUGGESTION #2

The government has a moral responsibility to look for new sources of revenue without taxing the rakyat literally and figuratively. They have been elected by the rakyat to lead the country with good governance and have at their disposal the resources to find ways and means to do so. Manpower resources MUST be maximized for this objective to steer the country to economic progress and freedom. It takes a lot of brains, grit, determination, research and commitment to do this. Are they prepared?

SUGGESTION #3

The government must do their utmost to achieve a high income society in Malaysia. If there is a problem with tax revenue in Malaysia, it is because of Malaysia's low per capita income where only 15% of the rakyat pay taxes. Bear in mind that the Gini Coefficient of our country is very high in comparison to other nations. Please read my post HERE.

Why is Singapore more developed than Malaysia? It has higher productivity and the people have higher income. There are low levels of corruption and high transparency and low evaporation of government funds. For the past twenty years, the income level in our country has hardly changed whereas for Singapore, they have lowered their tax rates because MORE people are paying tax!

There is no need to increase taxes if productivity is high.. Remember the RM270billion profit of PETRONAS over the last five years? How was it spent? Was it used in such a way that it increased the productivity of the people? Go figure.

Malaysia must become a high income society BEFORE the government implements the GST.

So do we really need the GST? Or can the implementation of the GST be a precursor to more economic problems looming in the horizon?

Graphic sent to me by wits0. Thanks!


If the government uses its resources prudently to increase productivity, there is no need for the GST.

But how has money been spent?

I mentioned it before and we all know...The money has been spent on submarines that cannot dive, jets with missing engines, naval ships that cannot sail, premier prices for items leading to RM28billion leakages as announced in the Auditor-General's report and the list goes on.

These and other expenditure on opulent and lavish buildings do not have any multiplier effect on our economy! We have a major cash flow problem and the government must help and NOT burden the rakyat. Our debt is too high in relation to our GDP. Go to THIS LINK for the BNM Summary Data Page on Economic and Financial Data for Malaysia.

Has the government done all that it can to stop leakages, to ensure ZERO corruption levels and to maximise efficiency and productivity for the well-being of our citizens?

According to Malaysiakini HERE :


The government has apparently sought to buy more time by putting off the tabling of the controversial for Goods and Services Tax (GST) bill for second reading when Parliament resumes its sitting on Monday.

Second Finance Minister Ahmad Husni Hanadzlah said government needed more time to gather feedback from the rakyat.

"It (GST) will not be tabled for second reading in the March/April session (of Parliament) because we need more time to engage with the public.

"We want the public's opinion on GST," Husni told reporters after opening the Kuala Lumpur Malay Chamber of Commerce (KLMCC)'s annual general meeting today.


I hope the Second Finance Minister will tell us how we can give him our opinion on the implementation of GST. Dear readers, it is our moral responsibility to voice our objection to this GST. Please do not leave it to the MPs or ADUNs alone for they have far too much on their platter.

Please give the GST issue very careful and serious consideration. Do not keep silent. Do we need the GST?

logo designed by wits0 and used with permission and grateful thanks

If you believe you don't, then follow the call of the second finance minister given today. Voice your discontent in legal channels such as in petitions, letters, forums, etc and follow the suggestions if given by our Second Finance Minister as to how we can give him feedback. It is up to you, me and EVERYBODY. Act now or regret for the rest of our GST-ed lives!!!!

On behalf of the rakyat, I appeal to the government NOT to implement the GST and to work hard to improve our well-being in salient, tangible, practical, logical, rational and accountable ways. Thank you!

30 comments to DO WE REALLY NEED THE GST?

  1. says:

    Anonymous LIFE =Live It Full Everyday ,
    =Live It Fun Everytime !! (iwc)
    hey, it rained here for about 45minutes, cooler now , Hallelujah !

  1. says:

    Unknown Hi IWC

    It also rained in Penang...cooler but not as cool as Friday evening. Stay cool and happy. God bless.

    Shalom

  1. says:

    Anonymous WHAT ! BTN used up 74juta of our blooded tax moneys in 2009 ? @#$%^&.

  1. says:

    Anonymous MWS's masterpiece was produced with much labor of love.

    Much kudos for her! Yippee!

    ~wits0~

  1. says:

    Unknown Dear Anon @ 9.01 pm

    Yes!!! Unbelievable but true. Check out the link. Thanks for being a passionate and caring Malaysian.

    Best wishes

  1. says:

    Catherine If the government uses its resources prudently to increase productivity, there is no need for the GST.

    Nothing is truer!

  1. says:

    Anonymous NO, i'm in agony seeing good moneys been wasted !

  1. says:

    Unknown Dear ~wits0~

    *blushes*

    Thank you! I could not have done it without your brilliant graphics and photo. Thanks a bunch, dear ~wits0~. You are an inspiration for greatness because you are a great friend!

    Cheers

  1. says:

    Unknown Dear Catherine

    Thanks for your supportive comment. Let's hope more will speak up against the implementation of the GST!

    Take care and God bless you.

    Best wishes

  1. says:

    Unknown Dear Anon @ 9.20pm

    I feel the same way!!! Take care and God bless you.

    Kind regards

  1. says:

    Kampung Girl Government puts off debate on GST bill.

    Aiyo, rakyat already said NO to GST. What more does the government want?

    Just forget about it lah!

  1. says:

    Kopi-O 2010 PM's Department's Budget :
    RM12 billion.

    Am I reading something in my dream?

  1. says:

    Unknown Dear Kampung Girl

    I believe they are aware of the many arguments against the GST and are trying to strengthen their stand via buying time.

    More if not all the rakyat MUST stand up and say "NO to GST!".

    Thanks and have a nice evening.

  1. says:

    Unknown Dear Kopi-O

    It is as real as can be and reported by Malaysian Insider as quoted by the MP.

    Thanks for reading and for sharing your thoughts!

    Kind regards

  1. says:

    Apa Nama Money does not make you happy - but it quiets the nerves!

  1. says:

    Unknown Dear Apa Nama

    Indeed! It takes away some of the worries of the world and lets us concentrate on other issues. Take care and have a restful evening.

  1. says:

    Anonymous Dear Kampung Girl,

    Can't you understand what the Second Finance Minister Ahmad Husni had said? The government needed more time to gather feedback from the rakyat.

    So, just be patient, okay?

  1. says:

    Boleh Man LIFE = Live In Frustration Everyday

    The government will eventually need GST, no doubt about it!

  1. says:

    Penangite The old doctor had never refused a call, from rich or poor - but now he was tired.

    "Have you any money?" he asked a midnight caller. Certainly he had money.

    "Then go to the new doctor. I'm too old a man to get out of bed for anybody who can pay for it."

  1. says:

    Unknown Dear Anon @ 10.56pm

    I believe many of us are frustrated at even the mere suggestion of GST. Times are bad and we are hit hard in our pockets.

    Take care and have a restful eveming. Thanks for sharing.

    Best wishes

  1. says:

    Unknown Dear Boleh Man

    When it is finally implemented, we will really be L I F E = Living in frustration everyday!

    Thanks for sharing. Take care and have a lovely evening.

    Cheers

  1. says:

    Unknown Dear Penangite

    Thank you for the reminder that time waits for no man and that life is like a brief candle. Cherish each day and live it to the fullest. Take care and God bless you!

    Cheers

  1. says:

    QQ Since life is like a brief candle, we should put some meaning into our life lest it becomes worthless, meaningless and pathetic.

    Hi everybody, hold up your candle and together, we will light up the world.

    Justice and peace for all.

  1. says:

    Anonymous Life flies by in an instant and we are old all too soon.

  1. says:

    Unknown Dear QQ

    Thanks for jiving with me in your comment. I appreciate your pure and sweet exhortation which I know surely comes from a heart that cares! Take care and have a lovely weekend. God bless!

  1. says:

    Unknown Dear Anon @ 11.43pm

    How true are your words! All the more we need to live each day to the fullest! Thanks for sharing your thoughts. Take care and please keep in touch.

    Cheers

  1. says:

    Anonymous Money bukan masalah but 'NO-money' is BIG problem !!

  1. says:

    Unknown Dear Anon @ 1.51pm

    I agree! I also worry for the elderly, pensioners, single parents and the handicapped if the GST is implemented.

    Take care and God bless you.

    Salam

  1. says:

    romerz Yes we do if we want to take the country to the next level of progress but not at the moment when the government and its underlings are so so corrupt and the income disparity amongst Malaysians is so large.

    GST should come one day as it is a tax on consumption (which is only fair) but not at the moment when many Malaysians are having difficulties trying to meet their consumption needs through no fault of their own.

    Simply because of racism and the needs of our political masters to prey on the unenlightened electorate to keep them in power. Damn Mahathir!!!

    They have been eroding the abilities of the Malaysian majority they depend on for power which is why we are where we are today; a "catch 22 situation" - damn if we do and damn if we don't!

    And the bastard who started it all? MAHATHIR!!!

  1. says:

    Unknown Dear Romerz

    Our government must raise our GDP, reduce leakages, obliterate corruption, increase productivity and our competitiveness both at a local and international level and undertake many economic reforms. The sad truth is - all this will be difficult because of the damage inflicted upon our country because of greedy characters. At the same time, we have to see the political will of leaders to put the interests of the rakyat first...

    In the mean time, we are given a brief respite. Whether or not it will be implemented is still uncertain but one thing is sure - it will be a long and winding road for Malaysia to achieve progress and to elevate our country to a much higher level than where we are today.

    Thanks for sharing your passionate response. Take care and see you at the Health Forum!

    Have a lovely day!

    Cheers

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