The most powerful prime and finance minister in the world

Democracy is about separation of power and basic internal control principal dictates that segregation of duties as a corner stone of effective check and balance. Having the prime minister doubling up as the finance minister is already a deliberate and gross impropriety design of Malaysia’s executive branch.

However, a not very known amendment to the Income Tax Act 1967 has magnified the abovementioned weakness by unquantifiable folds.

Back in 2005, after the nation gave Pak Lah an overwhelming mandate to run the country (with already well documented results), the then prime minister cum finance minister gave himself a most overwhelming and stunning instrument of power (or potential avenue of abuse).

Section 127(3A) of the Income Act, 1967, has been amended as follows:

In everyday English, the Finance Minister can exempt anyone from paying taxes on any income that is rightfully subject to tax under the income tax act.

What does this mean? It effectively means that the prime minister cum finance minister, is empowered to point to anyone he fancies and say, “hey, you don’t need to pay any tax even though everyone else is paying according to the income tax law.”

Given the climate of direct negotiation and inevitable cost overrun of government projects, mega, minor, failed or overprice regardless, widespread accusation of thriving nepotism and cronyism, one can imagine the power to award contracts and exempt income tax thereon can be a magnificent instrument of power and control.

While we are enraged by the annual horror stories revealed in the auditor-general’s report, we also wonder how much taxes these companies supplying hideously overpriced items to various government departments have to pay.

Or, are these privileged and mysterious parties are given special exemptions by both the MACC and inland revenue board at the sole discretion of the finance minister who since Mahathir administration days, happens to be the head of the dominant political party? Surely Malaysia’s prime minister is the most powerful one in the world!

----------------------------------------------------------------------------------------------http://news.asiaone.com/News/AsiaOne+News/Malaysia/Story/A1Story20111103-308484.html

No graft involved in purchase of binoculars

PUTRAJAYA, Malaysia - There were no financial irregularities involved in the Marine Park Department's purchase of two pairs of night vision binoculars which cost 10 times more than the market price, MACC deputy commissioner Datuk Shukri Abdul said.

The Auditor-General's Report 2010 had stated that the binoculars were 2,805% or RM56,350 (S$22,920) more than the estimated market price of RM1,940.

"In this case, no market survey was conducted to find out the actual price of the binoculars and that is a violation of the instructions," he said here yesterday.

Shukri said the MACC had consulted the Deputy Public Prosecutor and concluded that there was no element of corruption.

"We are also suggesting that the company be blacklisted for manipulating prices," he said, adding: "Our investigation found that the binoculars could be purchased for less than RM5,000 each."

The report also said the department paid RM16,100 for an LCD television and DVD player which was 638% more than the market rate of RM2,182 and RM11,845 and 246% more for a laptop.

Shukri said Kapal Masai Engineering Sdn Bhd was awarded the tender to construct an all-weather aluminium boat for the department.

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When a government makes a law or introduced changes to existing ones, their intention and reasoning must be made known to the public and properly debated and evaluated in parliament. What, one would wonder, is the rational of this piece of legislation to be introduced?

We know that in the PKFTZ scandal, Kuala Dimensi Sdn Bhd made wonderful profits selling land at inflated prices. However, its tax payment records were never made known to public. 

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http://en.wikipedia.org/wiki/Port_Klang_Free_Zone

PKA purchased 1,000 acres (4.0 km²) of Pulau Indah land from Kuala Dimensi Sdn Berhad at RM 25 per square foot for a total consideration of RM 1.8 billion (inclusive of interest). Kuala Dimensi made a capital gain of RM 993 million because it had purchased the land from Pulau Lumut Development Cooperative Berhad for only RM 95 million^[3] (at RM 3 per square foot). Moreover, the Minister of Transport saw it fit to reject the Attorney-General's view that the land could be acquired for "public purpose" under the Land Acquisition Act at RM 10 per square foot.^[3]

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What aboutt Gerbang Perdana Sdn Bhd who gets more money for not doing anything?

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http://thestar.com.my/news/story.asp?file=/2007/4/18/nation/17469893&sec=nation

Speaking after the handing over ceremony of the new Kuala Lumpur Courts Complex in Jalan Duta here yesterday, Samy Vellu announced that the Government had compensated RM222.4mil in two payments to Gerbang Perdana Sdn Bhd for the cancellation of the Causeway bridge project.
 
An additional RM35mil will be paid soon for the cancellation of the project, work done before the cancellation and the construction of a new bridge linking the Customs, Immigration and Quarantine (CIQ) Complex and the Causeway.
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The Barisan Nasional administration should disclose to the public that for the past 6 years since this amendment was introduced,

how many cases;

on what grounds;

to whom exemptions were awarded to and

the amounts involved.

On one hand, the rakyat is levied with RM50 service tax on credit cards, increase of service tax from 5% to 6%, hidden taxes in the form of toll charges, higher electricity tariff to cover for IPPs’ rates and probably GST after BN’s mandate is being renewed in the coming GE, one is truly intrigued by the actual operation and implementation of this subsection.

 If Najib as prime minister talks about having the best democracy in Malaysia, then he should look into this matter and clean up this mess that Badawi left behind. This would be an acid test to his administration effectiveness and political will as the path to remedy may be populated with burden of history and well entrenched structures.