GST bill delayed – good news

The latest news in MI says GST bill will be delayed, and that is good news.

I have written an article called” squeezing a pice of dry clother drier’ which was carried by Malaysian insider on Dec 16, as well as even Sedar, the Gerakan think tank which have incorporated my suggetions inside their memoradum submitted to the government.

I have asked for an postponement until the economy can REALLY grow healthily and everyone’s income is on the RISE. Not at this moment when our disposable income is getting less. I am happy that the bill is now delayed.

Whether our memeoradum did play any  part in the collective effort of the civil society (including many NOGs like FMM) to oppose the implementation of this tax  was not important; what was important is that it is now delayed, and the poor and the middle class should welcome this delay. SInce now the government says it wants more feedback from the pulic, I hope more people will write in to give their opinion to delay thimplementation of this tax until we climb up the world economic ladder. One voice will be small, togeth our voice will be louder.

For those who missed that article , here is part of the post:

In theory, GST is a good tax, and it will be good for the country if income is growing and people’s earnings are expanding.

GST taxes on goods consumed and so is a form of consumption tax. It expands the revenue base of the government, and as a form of consumption tax, it discourages wastage and encourages wiser spending by individuals and hence may be considered a form of “green” tax.

It is a fair and equal tax in principle since everyone is subjected to this tax as long as you buy things or get services. But in reality, it hits the poor more than the rich .

A 4 per cent increase in tax will be nothing to a high-income earner and would do little to discourage his spending habits. But a 4 per cent increase to a middle-income person will be felt quite badly, and he or she has to budget and reduce spending in order to save the same amount of money for a rainy day.

But to a low-income earner already struggling to survive especially in urban and semi urban areas, a 4 per cent increase in goods and services will really burden him, and when income is insufficient to cover expenses in order to survive, he has only two ways to resort to: either turn to the loan sharks, in which case his life will be even more miserable OR he may turn to crime.

A GST is good when the income level of everyone is rising and when the country is prospering. That way, the pinch felt would still be tolerable.

But in the words of a deputy minister, “Malaysia’s economy has been stagnant for the past decade”, a situation all of us know. So a GST at this stage when the economy is not growing will only push a big segment of population below poverty line.

In fact, Malaysia’s economy has been stagnant since 1997, more than a decade.

A fresh university graduate earned about RM1,500 a month then. A fresh university graduate earns about the same amount now, even though the money is much smaller now 12 years later, taking inflation into consideration. A cup of coffee costs more . A plate of chicken rice costs more. Income remains stagnant.

On top of that, his expenses have gone up.

In 1997, he did not have to worry about handphone bills. Now he has to foot handphone bills since the handphone has become a necessity. In 1997, he did not have to pay much for Internet services, but now, he has to dig out money for broadband, which is also considered a necessity to a university graduate if he wants to keep up with knowledge. The lifestyle now necessitates certain expenses which were not there 12 years ago, but are considered a necessity now.

Urban dwellers are now like a piece of moist cloth being squeeze for water. The moist cloth is fast becoming dry and still there is relentless effort to squeeze it drier; any drier, however, and the cloth will be full of irreparable holes.

I hope the implementation of GST can be delayed until the country’s economy really starts moving again. In the meantime, the government can easily find the RM1 billion revenue (which GST is supposed to raise) by more careful and prudent spending and tackling corruption at the top levels.

15 Comments (+add yours?)

  1. mykantree
    Mar 13, 2010 @ 15:30:39

    Dear Dr,

    It certainly is good news that its implementation has been delayed/put on hold. But the real concern is the actual objective of this GST in the first place. Recently the government has been putting up a lot of brain-dead and still born ideas and proposals, purportedly for the good of the country. A classic is the new petrol subsidy scheme; which has also been abandoned. I wonder at the time and expense spent on them in the first place.

    It will be interesting to find out what the NEM will be all about!


  2. Dr Hsu
    Mar 13, 2010 @ 15:43:43

    I attended a round table forum on petrol subsidy which was attended by Navaratnam, FOMCA represntatives, NGOs, as well as the Deputy Minister fro Domestic Trad and consumer affairs Tan Lian HO. In that forum, all of us gave our views to Tan that all of us strongly objected to the 2 tiered system of subsidy. Nava even said in very strong words that the whole system must be changed… Gerakan internall meetings also objected strongly to this and Tan was asked to talk to her boss and her ministry officilas. In the end, they realised (the officials) that it was almst impossible to think of a mechanism to implement the 2 tired system, using mykad.

    I totally agreed that this was very short sighted as in many other instant. What they should have done is to have dialogues with people first before announcing certain policies, and not announcing policies first and then when there are strong resistance , they flip flop… Yes, there are so many flips and flops… flip, flop, flip flop flip flop flip flop flip flop……………Sigh!!!!!! …… VOmit blood…

    The whole system must be changed….


  3. Richard Loh
    Mar 13, 2010 @ 16:09:25

    I am wondering why they never first seriously plan and thought out what they intend to introduce. Just 1 year, no less than 3 policies have to be scrapped or postpone. What are these ministers actually doing. When they cannot stand the people questioning and protest, only then will the government says it wants more feedback from the public. They are always putting the cart before the horse. Or are all these political ploys to tell the people that the umno/bn government always listen to them? There is certainly something wrong with these present teams of leaders running the country.


  4. cilipadi
    Mar 13, 2010 @ 16:10:49

    Chili padi GST not yet burn rakyat, after all

    cilipadi forever no GST, you can makan without GST.

    GST no makan cili, rakyat rasa no pedas


  5. Chabalang
    Mar 13, 2010 @ 18:40:42

    Dear Dr.,

    Probably too early to rejoice – GST is not scrapped but DELAYED (as per your title). BN knows that it is suicidal to introduce GST before GE13 – giving PR too much ammunition. If BN wins GE13 comfortably, I am sure GST will be implemented regardless of what the rakyat says.

    The Govt is in unsustainable fiscal position – they need more $$$ (or tax).


  6. Trackback: GST bill delayed – good news | Dump Blog
  7. klm
    Mar 13, 2010 @ 22:54:14

    The govt simply do not have the courage to implement the GST. They simply would not dare. The politicians knows how to count vote. The noise we all made scare them.

    But, I have the suspicious feeling that the real reason for this GST hooha is for some people to make money from contracts to study and implement the scheme. How much had this govt already spent?


  8. romerz
    Mar 14, 2010 @ 02:42:26

    Dr Hsu,

    GST should be postponed until CORRUPTION is reduced amongst the government ranks and a completely impartial and independent MACC and PDRM is in place, if at all possible under the present government.

    It makes no sense to put good money sourced from poor people into the hands of people who only know how to seek rent!


  9. Lai Kee Kong
    Mar 14, 2010 @ 10:23:58

    The problem with delaying the tabling of the GST bill is that the process of getting past parliament and into fruition will take a few years. By the time it comes out the other end of the pipe, we could be in another recession. The time to start the process is when we are on an upswing, which is now or very soon. If we start too late, the GST bill will bring more pain.


  10. Ken
    Mar 14, 2010 @ 11:18:22

    Maybe the govt is waiting till after the 13th G.E. to implement GST.


  11. klm
    Mar 14, 2010 @ 17:48:12

    Dr Hsu’s article reminded me of a story of Indonesia. A friend of mine was going through Indonesian’s immigration. When asked what he was doing in Indonesia, he replied “makan angin: The reply from the immigration officer was ” awak makin angin, saya makan apa?”.

    The moral of the story is that if the cost to live in Malaysia is higher than the income of the average person, then corruption will be rampant. Every time some amount is taken off from the salary, whether its is GST or higher cost of fuel or increase in milk powder, without increase in income, it added pressure for the average person to seek means to extract additional income from his job. It might be stealing from the employer or extorting from suppliers or from the public.

    Examining the conditions we are facing, I say that corruption will increase rather than decrease.


  12. klm
    Mar 14, 2010 @ 18:11:34

    Some of you may have miss this. This is a story of Malaysia bananas in a banana republic.


  13. 1MY
    Mar 15, 2010 @ 11:03:15

    Depending on what goods the government is planning to impose the GST.

    In western countries not all transactions are subjected to GST. Only the processed products eg. petrol, electrical goods, car servicing, books, etc.

    I think the public are being misled on this issue.

    It is a tax on those who can afford those luxury items and not on our daily needs.


  14. Ken
    Mar 15, 2010 @ 15:08:38

    The govt will not tax essential goods and medical good under GST but poor people need to consume other goods beside the essential ones. This is a very wide ranging tax and it is fallacious to think it is only leveraged on luxury goods.

    Even for goods not subject to GST they may still go up in price due to higher cost of production from GST levied on other goods and services which are necessary to manufacture those non-GST goods.

    GST is a very wide ranging tax. Nobody can escape, certainly not the poor.


  15. disgusted
    Mar 16, 2010 @ 00:23:47

    Basically AMNO has enough grievances and unresolved problems in its hands and does not want GST to be an extra load which pervades almost everyone. A sign that the GE is on the horizon and AMNO already identifying candidates for the next tsunami. Yes, Malaysians should also sharpen their alertness and cohesion to fight for a 2 party system and whatever justice that will better the political landscape. Also unless the per capita is raised and general wellbeing of the unprivileged improves, the GST is of no benefit especially to the poorer segment.


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