Proposed GST will not burden the people, just a little rap on the knuckle

In drafting legislation, it is important to assess the intention and the problem the law seeks to address hence in interpreting legislation, British judges use certain approach such as the Mischief rule.

So when I look at the penalty provisions of the draft GST, I wonder why the penalty imposed is so harsh, especially when compared to Income Tax Act, 1967.

Taken from China Press's excellent report:

消費稅法案嚴懲逃稅初犯罰20倍 重犯罰40倍
SEVERE PENALTIES UNDER GST; fine for first offense is 20 times the tax payable , 40 times the tax payable if repeated offense
（吉隆坡16日訊）2009年消費稅法案闡明，逃稅者或協助他人逃稅的人士，將面對相等于逃稅額10倍至20倍的罰款，或監禁5年，或兩者兼施。
According to the draft GST legislation, GST evaders or people assisting acts of evasion shall be fined 10 to 20 times the tax payable amount, of face 5 years imprisonment , or both. (note this is for first time offenders)

重犯者必須依據逃稅額重罰20倍至40倍，監禁不過7年或兩者兼施；如逃稅款額無法確定，罰款將介于5萬令吉至50萬令吉，另外也可能面對最高7年監禁或兩者兼施。

Repeated offenders shall be fined between 20 to 40 times the amount of GST evaded or imprisoned not more than 7 years of both. If the amount evaded cannot be determined, the fine shall be between RM50,000 till RM500,000, in addition to maximum 7 years imprisonment or both.

If you were to compare with the penalty provisions of the Income Tax Act, 1967:

Offences, Penalties and Compound

An offence is committed under the Income Tax Act 1967 under the following circumstances :

Failure to notify chargeability ( Subsection 77(2) or 77(3) )

Penalty imposed is 10% of the total tax payable subject to a minimum of RM 300 and a maximum of RM 5,000.

In addition, there are other avenues such as appeal and settlement with the Inland Revenue Board, rather than being bunched together with murderers, rapists and other violent criminals.

An appeal may be settled :

a. By agreement between the taxpayer and the IRBM, or
b. By a decision of the Special Commissioners of Income Tax / the High Court / the Court of Appeal

Please note that if you are not satisfied with the decision of the IRBM regarding your appeal, it will be forwarded to the Special Commissioners of Income Tax. If you are dissatisfied with the Special Commissioners decision, you can appeal further to the High Court and the Court of Appeal.

Why such harsh penalties imposed on GST offence, especially when compared to income tax? (who is so desperate for $$$?) 

Is this a good approach to create a business friendly environment and attract foreign investors?

What is the intention for such harsh penalties?

Regardless of whether this provision is amended or not, the intention, mind set of the Barisan Nasional administration is exposed. Rakyat diutamakan illustrated.

阿末胡斯尼也說，那些每年營業額不超過50萬令吉的公司，無須徵收消費稅，因此在這項條件下，國內將有超過70%中小型企業不受消費稅影響。

Ahmad Husni (Second Finance Minister) added that companies with annual turnover amounting to not more than RM500,000 will not be required to collect GST hence under this condition, more than 70% of the Small Medium Industries will not be affected by GST.

Rubbish. SMIs purchase stocks, office supplies, incur repair and maintenance expenses and whatever not from wholesalers, service providers, financial institutions, factories etc which turnover easily exceed half a million a year.

SMIs who purchase something at RM10 now have to fork out RM10.40 and guess who they want to recoup from? Malaysian businessmen are great at raising prices and not so great at lowering them,Why give business people an excuse to raise prices? remember the aftermath of petrol pump price drop after Badawi's suicidal increase?

一旦消費稅法案通過，執行消費稅法令的官員，可以在不需逮捕令情況下，展開逮捕行動。
此外，官員一旦掌握充分證據，便可以在沒有事前獲得准令情況下，搜查任何地方、產業或交通工具。

Once the legislation is passed, enforcement officers are empowered to arrest without a warrant. In addition, once with sufficient (note: can be pretty judgmental, this one) evidence, the officers are empowered to search any place, properties or transport vehicle without a warrant.

“如果有關官員有充分理由相信延遲發出搜查令，會導致逃稅物品被移走，他也可以在還未取得搜查令的情況下，展開搜查工作。”

"if the officer has sufficient reason to believe that a delay in issuance of warrant will result in tax evaded items being removed, the officer can also commence search operations before obtaining a warrant".

- I wonder if the legislation left out this, "in the event of a death of a willing witness in the course of assisting tax evasion investigation, no enquiry shall be carried out provided that the officers involved declared that they have no reason to act in bad faith."

Ok, silly jokes aside, this is no laughing matter.

提呈下議院一讀民聯議員反對無效

1st reading of draft legislation, protest of Pakatan Rakyat MP overruled.

2009年消費稅法案今天在國會下議院提呈一讀，遭民聯議員反對，因為下議院內仍有許多法案未處理。

Pakatan Rakyat MP protested at the first reading of draf legislation for GST act, 2009 because there were other legislation which were still being debated and not finalized.

行動黨安順區國會議員馬諾卡蘭在第二財長拿督斯里阿末胡斯尼提呈法案一讀后，馬上站起來提出反對，以求能夠暫緩有關程序。

DAP MP Manogaran, upon the submission by the Second Finance Minister (note: why we tax payer have to pay double? we used to pay for only 1!) for 1st reading, tood up and protested and appealed for the legislation procedures to be postponed.

他說，下議院內仍有許多未處理的法案等著議員辯論。 他的反對卻不獲下議院副議長拿督旺朱乃迪的理會

He stated that there are currently many draft laws unattended to and awaiting debates. His protest were not heeded by Deputy Speaker Dato Wan Junaidi (note: you never get to read this kind of things in Utusan).

- remember the last time a legislation ws bulldozed through Parliament? It was the MACC legislation and we got Teoh Beng Hock as a present from the BN administration.

政府將在消費稅法案下成立“消費稅上訴仲裁庭”，處理不滿消費繳稅額人士的上訴。

The government shall set up a "GST appeal tribunal" to tend to appeals by taxpayers.

凡是不滿繳稅額者，可在30天內提出上訴，上訴者須出示所需報稅文件證明，否則案件不受理。

Those who are unhappy can submit an appral within 30 days and are required to submit all relevant documents otherwuse their case would not be entertained.

仲裁庭裁決將是最終定奪，而申訴者不能再提出任何上訴。

The tirbunal's decision shall be final and no avenue of appeal is possible.

In tax dispute cases, time is needed to collate documents, substantiate facts etc. 30 days?

Ok, if a company has proper documentation processes and diligent staff. Many SMIs are either ignorant, sloppy or tak apa and GST documentation is one of the most tedious filing undertaking. 30 days deadline for a GST case that requires the tax payer to back track a couple of years worh of paper work may not be feasible.

Shell Singapore, as I saw it with my own eyes (given its volume of transactions and resource available) has a GST department headed by an experience accountant with a full time staff just to keep track of all the sales and purchase invoicesplus submission and remittance records.

Obviously, people drafting the law has no idea how an accounting department works.

第96條文：索取超額退稅者可被罰款不超過5萬令吉或監禁3年，或兩者兼施；有關人士也可能面對雙倍退稅額的罰款。

Section 96: those who have seek excessive GST refundc shall be liable to a fine of not more than RM50,000 or 3 years imprisonment; or both. The person so convicted shall face a fine double the amount refunded (not the excess refund??? - lost in translation ...or not).

Some fler, obviously a cybertrooper commented in YB Teo Nie Ching's blog that "we must trust the government in GST matters..." or something to that effect, well I hope he or she is happy now.

I wonder of other countries' GST legislation, carries such harsh terms...DO YOU WANT TO KNOW MORE? I can do further research if you want me to.....

UNDILAH KERAJAAN BARISAN NASIONAL