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

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)
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:

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.
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?

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.
"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.

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

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

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.

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.....



  1. UselessMalaysNationalOrganization -------> UtterlyManipulatingNationalObligation ByAbusingRakyatUrbanity.
    Can you see the result of BTN? They are ARROGANT, BLACKMAILING and CONSPIRING.
    What is their ultimate goal?
    They are trying to dry up Malaysia to becoming permanently a BankruptNation. See that?!
    Altantuya Shaariibuu murdered and C4ed case alone, they have siphoned more than RM 500,000,000.00 or Euro 114 million. This was testified in the Parliament. Isn't it abuse of power? Mind you, this is only a tip of an iceberg. Through the regime of Mamak Kutty and the formation of UMNO Baru, the country's wealth has been eluding to countries like, Singapore, Australia... and recently to England by the billions.
    My fellow Malaysians, be smart change the ruling regime or NegaraAndaJadiIkanbilis'. May be it is already toooooooo late!!! God bless Malaysia.

  2. I believe those who read the many posts on GST online know just how GST will affect the lives of all Malaysians, no matter how the government spins it.

    The trouble is those who still rely on the government-controlled mainstream media will probably swallow the government's words hook, link and sinker. After all, 4% is less than the current "5-10%" service tax, isn't it?

    Like an illusionist, the government is attempting to redirect our attention from the truth. It may not work for those of us who keep updated online, but it will probably work for everyone else. After all, Malaysians have a traditional "tidak apa" attitude.

    However, the biggest issue overall is this - how do we stop them from implementing such a draconian version of the GST? PR politicians can argue all they want, but it will probably get bulldozed through anyway.

  3. That is the real mining of Najis "Rakyat Diutamakan".....he is thinking how to squeeze money out from rakyat who are his focus.

  4. Dear Dr.

    Let you tell you this.

    Malaysians deserve GST because they voted for racism, corruption and discrimination. They happily sell their future and the future of their children because of a pack of rice, RM300 packet or whatever.

    They are too lazy or too dumb to think & judge the performance of elected representatives.They think elected representatives with titles are deity and beyond reproach yet when it comes to Pakatan Rakyat representatives they set incomparable performance standards or unrealistic expectation and demand demand personal favours in return.

    Not all Malaysians are like that, in fact many Malaysians are not like that but there too many Malaysians are just like that.

    The solution? Accept and pay the GST. Bad law is bad law but still the law. Come next GE, demand for abolishing GST loud and clear and see what happens.

    In the meantime, cut down on consumption but unfortunately business will suffer...or practice selective spending and boycott politically connected businesses

  5. Hey WeeTak, hope you're doing ok down south.

    I hate to be as bitter as you, but after the Bagan Pinang defeat, I still am.

    Since those rural folks condone corruption, let the GST hit them where it hurts most, their wallet. May the powerful plunder them until they can only afford to eat dirt.

    Only pity those who voted for change and still got this raw deal.

    Anyway, its Christmas season, I should be more forgiving.


  6. JH,

    my down south is still functioning not that my missues is complaining too much

    the optimist in me remembers what happen in Ijok but then again the folks you encountered in Bagan Pinang are more ulu than the uluans themselves

    we have no choice but to continue to work. I hope history will record GE08 as the start of an irreversable trend towards bi-partisan, the end of the beginning....

    people do achieve the unexpected. 15 years ago, if I tell you I bottle up drinking water and sell it for RM0.50 you will say I have lost my marbles. When the Wright brothers said humans can fly, not many people believed them.

    Pakatan must work on the oblivious, ignorant and uninitiated. The days of preaching to the converted should end and initiative to get new yung eligible voters should start now

    I shall try and do my utmost at my end, not much but a little bit more than my down south and I hope you keep your hope and formidable chin up!

  7. With all the brain migration going out, including down south; I just wonder in future how Malaysia is going to sustain as a high cost, sluggish, knowledge-less country.

    Country's income is 50%-reliant on petroleum tax. This gst is suppose to fill the gap of dwindling petrol reserves and drilling operations right. For so many years BN have not curb the high cost of corruption which translates into the high cost of running the country, what BN did was just to turn on the petrol tap only. So now the tap is giving less and we poor people are getting whacked.