Thursday, July 11, 2013

Food for thought (1) - GST

For those Chinese who complain about being the major (principal) taxpayers in Malaysia, you should support the GST, because GST is like a dragnet which catches everyone who buys 'goods' (taxable by GST*) and uses 'services' (taxable by GST).

* assuming some goods and services will be GST-exempt

GST dragnet

If you buy, say, bread, and bread is a GST taxable goods, say by 5%, then it doesn't matter whether you are Ibrahim Ali or char koay teow seller Lim Hock Chye who lives in Ayer Itam Penang, you'll be paying the same 5% per loaf of bread.

The government desperately needs more revenue and GST** is just great for this. And with GST, almost every Malaysian will share in the burden of national expenditure.

** only drawback of GST is 'services' will go underground to avoid the GST, so the government has to legislate severe punitive penalties and an effective surveillance-enforcement system for tax evaders, but which must be corrutpion-free wakakaka

So grumpy taxpayers, think about it, wakakaka.

GST dragnet


  1. I support GST if reduction in personal tax otherwise will have double pay tax

  2. GST is not meant to replace personal taxes but the taxes that are already imposed on goods (products, items like TV, fridge, tyres etc). So in fact you're already paying these taxes, namely personal income tax, tax on goods, etc.

    However with GST being a wider and more effective net to replace the individual taxes on goods and services, as an effective source of government revenue, it will keep personal taxes low.

  3. Sounds good but the devil is in the implementation. Worse still we don't trust the Authorities to manage our money prudently; so the GST will be an additinal tax and will in fact increase our overall tax paid. That's why even the poor tax paxpayers now who should support GST are also not in favour of it.

  4. GST: one for all, and all for one.

  5. We must be dreaming. In a normal environment, GST helps the government balance the budget (Spore GST system is an exception since government coffers give public investments more bullets through GIC, Temasek etc... to the bewilderment of Sporeans.. wakakaka).

    However, if GST is to cover the "hole" when resources from other revenue streams were meant to cover government expenditure, then we are dreaming. Worst still, GST revenue will be poured into more dubious projects, thereby bringing Msia further into a deficit spiral.

    Like in your previous posting, defense is necessary but what qualifies Msia's spending? A post-20 century Asian apocalypse? The fact we have two Scopene subs proves the point. Retired generals mention about the mismatch of equipment and weaponary.

    Spending big money on SPR on the last GE is another case in point.

    Therefore, with dimishing infrastructure projects, very little allocation of resources going to elevate poverty etc, how will GST be used?

    If the PM's of Msia (with the rare except of Tun M barring his personal vanity projects to fight Western capitalism) were CEO's of public listed companies, they would have been fired by the board long time ago.

  6. an effective source of government revenue, it will keep personal taxes low.....

    betul ke? and just where did you get this?

  7. I'm 100% sure the prices of goods that consumers pay will go up with GST, except for the barest essentials, which will be exempted.
    On the other hand I have 0% confidence that taxes for the middle class will be low or reduce at all. The Government, after all is expecting a substantial net increase in income. The only way to do that is to maintain or even increase the level of revenue from existing income tax. After the "Chinese Tsunami" Najib has no reason to make things any easier for middle to higher income taxpayers, who are majority Chinese.

  8. One group that will surely suffer : retirees, with no source of income, having to pay more tax through GST each time they spend from their savings or pensions.

  9. In Australia the GST is 10%. Some items become cheaper while others increase. The aim of GST is not to load another additional tax on whatever is currently taxed and at different rates. It is to levy a uniformed tax on all goods and services (except those exempt). It has less administrative complexity.

    Since the GST is a wider tax net, the government is assured of more revenue.

    In one way it's fairer (you use a 'good' or 'service', regardless of who you're, you pay GST); in another, it becomes more expensive for some (eg. items previously not taxed at all will be GST-ed)

    So it's 6 on one hand, and half a dozen on the other. The winner is the government who will encounter less taxation complexity (one uniformed GST rate) and a wider tax net = more revenue = hopefully no additional/increase in personal tax

    1. Kaytee,
      Thanks to John Howard, Aussies started to pay 10% GST. Secondly, one must understand that GST is a regressive tax. Meaning it's the poor & the middle income class would have to share the burden of the taxes. Not the filthy rich.
      Reason is very simple. It's kinda like a pyramid scheme where not many filthy rich people at the top. No matter how much more money they would spend on GST, the impact would not be great.
      With GDP not strong enough to support coupled with the fact of having such modest population size, the poor & lower middle class would kenna squeeze more.

      Do you see the logic behind or not? BN is using this as a panadol to solve all revenue problems & passing the buck to poor Malaysians. So I say if the government of the day doesn't come up with a comprehensive plan on how to stem loopholes, raise income standard etc etc........GST IMPLMENTATION.....NAH SMELL MY FUCKING ARSE. FUCK OFF!

      This is a documentary on how actually poll tax which was actually fair & good vehemently opposed by all strata of british community leading to the demise of Maggie Thatcher, the Iron lady. By the way, Julia is a bitch as compared to Maggie or even Shirley William.
      Anyway, Aussies are fucking second class as compared to Mother Britain. Heard of british convicts banished to aussie land. Hahahahaha!

      By the way, I can vote in UK. You can't in Aussie land because you no aussie lang. Me just being commonwealth citizens can. Hahahaha!

      Just wondering if Malaysians would do the same as what britons did to Maggie

    2. agreed with your 1st paragraph

      on 2nd para, re "raise income standard", that's a different subject

      on 3rd para, Julia was discriminated against because she is Chabor, Atheist, and Single but living with a man

      I wonder whether I can vote in UK if I prove my dad was a British citizen, wakakaka

      re last para, no, because the majority of Malaysians are actually conservatives - see they won't even do away with capital punishment

  10. Few dispute the need to augment government revenue. But spending the gain on dubious 'I help you, you help me' projects for the sole purpose of winning elections really irk the public.

  11. If the Chinese pay the highest proportion of income tax in Malaysia, it is simply because, mathematically, they earn more than any other community.

    Its not just a matter of a few very rich individuals. The community is overall very wealthy.

    And they dare go around complaining about marginalisation.
    Ungrateful Bastards.

    1. I came from a very poor family - you won;t be able to imagine how poor my family was, so don't imagine all Chinese are rich. We need to study deeper into why the tax burden has fallen principally on Chinse

    2. High income Malay/Muslims pay ZAKAT in lieu of Tax.
      That's why the majority of Income Taxpayers are non-Muslim, and Chinese being the larger proportion of non-Muslims - pay most of the income tax.
      My charkoayteow seller earns about RM4k/mth and supports his 3 kids, his wife, his mum and tries to pay for his house (no discount), bike and stall. His kids get no scholarship, free books.He has no EPF, no Socso. He says he pays about RM500 in tax/year.
      Not all who pay tax are from the high income group.
      it would be great if all the NEP-beneficiaries who succeeded in life pay their share - afteral, weren't they educated with OUR tax money?

    3. "High income Malay/Muslims pay ZAKAT in lieu of Tax"
      I have heard that zakat paid by Muslims are deduct direct from tax payable and not taxable income which is normally the case for other donations to charities, etc. I cannot believe this is the case as theoretically all Muslims could donate all their payable taxes to zakat and get the full refund from IRD for any taxes paid in advance.

      Being the knowledgeable guy you are, perhaps you could explain exactly the situation on zakat and tax payable to clear the air. Thanks.

    4. Thanks but really I'm NOT that knowledgeable On Islamic matters, though I'm aware that zakat is one of the 5 pillars of Islam. I think it is a great and caring social equity system where the rich contributes towards the well-being of the poor, and makes Islam one of the greatest social systems in the world, provided the teachings of Prophet Mohammad (pbuh) are not distorted for modern-day political expediency and gains.

      BUT zakat is NOT a substitute for national income tax as it is only an Islamic charitable contribution, aimed specifically at the poor and ailing of the community and those who wish to be converted to Islam - I recall additional contributions would be termed sadaqat.

      The Christians have a similar system where some churches expect a specific percentage of the devotees' income. The Buddhists also have a charitable system though unlike the Islamic-Christian systems, is only on a voluntary basis and not mandatory/demanded.

      Thus zakat is separate from and, for Muslim (and devotees other religious contribution system) in addition to, national income tax.

    5. I think Anon 8.23am July 15 query is the zakat is deduction is a relief or a rebate.

      If you look at your income filing form, zakat is after the calculation of tax %age, hence is a full rebate, unlike other donations which is before the calculation (relief). For example if you donate

      RM10,000 of medical equipment and your tax rate is 24% you get back 24% x RM10,000 = RM2,400. Whereas if you pay zakat RM10,000, you get back RM10,000.

    6. Zakat is Islamic and universal, whilst its role in a national income taxation system is uniquely Malaysian and cannot disguise the true purpose of zakat as taught by Prophet Mohammad (pbuh) and the Caliphs

  12. In theory, it always sound good.

    In practical, especially in Bolehland(TM), the burden will be on the urban people. First, rural voters will be taking cares off, and you can bet, some form of SUBSIDIES will be created for the remote place, thus , skew the real economy. Then, "relief" will be given to civil servant, well, you should not ignore the good "every 15 Malaysia worker, there is 1 civil servant".

    So at the end, those "umno vote safe box" will continue be umno safe box.

    So GST will be "fair taxing" ? Just in kaytee sweet dream, oh, and not to forget account firms that that slice of their shares from the "services".

  13. Zakat and Bai Tul Mal is the hub of Islamic public finance. These two provide for the collection and the disbursement of funds, respectively. By form, zakat may be likened to taxes. It is essentially a tax on assessed income, savings, property and corps.

    The rate varies from 1% to 20%. However, the rate on, income, savings, and wealth is fixed at 2.5%. On agricultural and farming products the zakat levy is either 5% or 10%. The highest is on mines and treasure-trove, irrespective of whether they are individual or state-owned the rate imposed is 20%.

    The Bai Tul Mal is not for Muslims alone. It is responsible for the welfare of all citizens regardless of their race, colour or creed. Other than providing a social security system, its function includes financing public sector projects, i.e. building of roads, schools, hospitals, bridges, etc.. mainly to improve the living standards.

    In addition to the sources of revenue from zakat fund, the Bai Tul Mal also receives funds or assets from Waqaf , Kaffarat, Sadaqat, Kharaj, Jizyah, Ghanimah, and also from the custom duties and also tolls. If the sources of funds are insufficient, the government may impose additional taxes on the rich and the wealthy. Perhaps similar to GST?


  14. See from this discussion that there are 2boxes that receives public's money. Box1 is LHDN for taxes. Box2 is bai tul mal mentioned by hasan above fr zakat. We all know box1 is used for government expenditures and developments like building roads, paying salaries, building hospitals etc.
    Is money from box2 being used with same purposes?

    1. You are quite right but not really.

      At present the fund is very small. Not many Muslims pay the zakat, waqaf, sadaqat, etc… as what we are discussing here. Disbursement of funds to beneficiaries and social projects are thus quite limited. But I would like to suggest that Bai Tul Mal to establish institutions like Qard-Hasan and co-operatives so that it could be more effective.

      As I have mentioned the cornerstone and hub of Islamic finance/economy is the system of Zakat and Bai Tul Mal which is totally different from the present system. A dual economic system should not be allowed to exist because this will dislocate the economy.

      - hasan