GST: Najib's justification examined

Najib: GST Bill to be tabled soon

NEW YORK, Nov 24 — Datuk Seri Najib Razak said a bill relating to the proposed introduction of the goods and services tax (GST) will be tabled for first reading at the end of the current Dewan Rakyat sitting.

The Prime Minister said the move was agreed to at the last Cabinet meeting.

I already blogged briefly about GST here.

“This will allow the public to give their comments, engage them, and if we find it necessary to fine tune it, we’ll do so,” he told Malaysian journalists covering his working visit to New York yesterday.

- majority of the Perakians want the DUN to be dissolved and fresh election called, would they be allowed to give their comments, be engages and if necessary, the EC will allow it?

He stressed that if the government decided to introduce the GST in Malaysia, it would do so “very gently”.

“It’s not going to be an abrupt introduction,” Najib said, adding that if the GST materialised, the rate would not burden the poor or middle-class Malaysians.

At the moment, people with salary below RM3,000 per month can be exempted from income tax. Now a poor person in Malaysia should be earning less than RM3,000 and with GST, that person who was not paying income tax would now instead be required to pay GST.

Now how would "not burden the poor"?

“And, it would not lead to inflation,” he added.

He has to explain how he can guarantee that there will be no inflation as a result of GST. Inflation is defined as generally increases in price of goods and services. Now if something that cost RM100 now becomes, says after GST at 5% , RM105, to me as the ultimate payer of GST, there is a price increase.

One possibility of no price increase is for the price of goods to be reduced somehow, then after the GST of 5%, remains at RM100. The is the point of view for the man in the street.

As far as I know, after the price of petrol shot up durang Badawi's time, the hawkers raised their prices and the price of wan ton mee and teh tarik etc have remain unchanged even after the petrol price dropped.

Compliance costs to the business would increase so it is imaginable that in some way, the business community will seek to pass onto the consumers. Compliance costs ranged from software upgrade, training of staff, additional stationery, increased cost of irrecoverable trade debts etc. A business that do not pass on higher cost to its customers would be a rare breed.

Corruption is not rare in Malaysia. Corruption adds up to the cost of business and would be reflected in the selling price of goods and services so in addition to paying for cost of allt that nonsense, Malaysian consumers will now be taxed on leakages, inefficiency and corruption.

And how does this not impact the poor, and the not so poor as well?

The other possibility is that Malaysia’s CPI would be calculated net of GST. And lastly, when the CPI does move upwards, Najib can always bring out a host of other reasons like world economy, commodity prices etc in the controlled main stream press. Najib wins hand down.

"The Prime Minister pointed out that Malaysia was one of the few countries in the Southeast Asian region that had yet to implement the GST."

And Malaysia is the only country in SEA that distinguishes the entitlement of its citizens by race and religion. Care to comment on that?

“Basically, the whole world has introduced the GST,” he said.

Blimey, our PM runs the country on the basis of what other countries do, NOT what the citizens of this country with our own set of issues need and want. A Wakil Rakyat is suppose to represent the tax payers' voices in Parliament, and not implement things by following the whole world only.

If Najib still insist on this mode, then please follow the examples of the abolishment of apartheid in South Africa, come New Zealand is rated as the least corrupt nation in the world and why certain European countries can give high quality and free medical care to its citizens.

While tabling Budget 2010 in October, Najib said the government would take firm measures to strengthen its financial position and recognised that adequate revenue collection was vital to support rising expenditure as well as reduce the nation’s increasing debts.

Najib has failed to explain what constitute rising expenditure. I strongly recommend that by taking stern action on the AG reports, substantial cost savings can be achieved by firing negligent civil servants who have persistence practice of gross wastage, no more bail outs and open government tenders.

If I remember correctly, in the budget presentation, Najib mentioned that there would be a cost decrease of 11.2% so is there a consistency issue here? I blogged about this observation as below:

"No mention of cost controls. Najib mentioned about expenditure would be decreased by 11.2%but base on Jabatan Audit Negara’s report, most agencies have developed a culture to see who can overspend more, budget or no budget. A more effective way is to rigorously impose cost control, opening up government tenders, punishing errant officers reported in the JAN reports. That itself can generate savings."