Laughing Stock / Stok Ketawa 5 : Why The Government Wants To Shy Away From English Scene 5 / Kenapa Kerajaan Mahu Memansuhkan Bahasa Inggeris Babak 5

Exhibit 1 / Lawak Pertama

Question / Soalan

What is the name of the delicacy which is served by this restaurant? Apakah jenis makanan istimewa yang dihidangkan oleh restoran ini?

Answer / Jawapan :

The actual word is supposed to be French ‘Fries’ not French ‘Fried’ / Perkataan sebenarnya haruslah ditulis sebagai French ‘Fries’ bukan French ‘Fried’

Comment / Komen :

My God, they are frying French people and serving them to potential customers / Oh Tuhanku, mereka menggoreng warga Perancis dan menghidangkannya kepada para pelanggan yang hadir

Exhibit 2 / Lawak Kedua

Question / Soalan

What is the name of the food served by this restaurant? Apakah jenis makanan yang dihidangkan oleh restoran ini?

Answer / Jawapan :

The actual word is supposed to be ‘Eel’ Rice With Egg not ‘Ell’ Rice With Egg / Nama sebenar makanan diatas sepatutnya ‘Eel’ Rice With Egg bukan ‘Ell’ Rice With Egg

Comment / Komen :

Is this really a menu or is it taken out from the ‘Elle’ magazine’s food section? / Adakah ini sebenarnya menu atau dipetik dari ruangan resipi majalah ‘Elle’?

Local Government Elections In Malaysia ( Part 2 / Epilogue )

Part 2 : History Of Malaysian Local Governance In A Nutshell

The British Era

The present system of local government, alike any other countries that were former colonies, could be traced back to Britain which colonized Malaysia for a good two centuries.

In 1801, the British established a Council Of Assessors in Penang which was given the role of planning and developing municipality area. This was the foundation of local governments in what was then Malaya ( or Peninsular Malaysia ).

It was only a matter of time that these policies were introduced to other states beginning with Malacca, followed by Federated and the Unfederated Malay States and finally Sabah plus Sarawak. A total of 289 units of local councils was established in Malaysia prior to its independence in 1957.

However with the passage of time, local government authorities in Malaysia has transformed into a system with its own identity that reflects the political, economic and social climate of the country.

Prior And Post Independence / Merdeka

Most Malaysians hardly ever knew of the existence of a vibrant local level democracy that existed in the 1950s and 1960s. There were 373 local authorities which had 3000 elected representatives out of 4223 local councillors. This excluded Kuala Lumpur municipality since it was the federal capital.

Out of these, George Town, Ipoh and Malacca remained as the most significant municipalities. Penang and Malacca had local councils state wide and only Penang had fully elective councils both on the island plus the mainland.

George Town was the first place were elections in Malaya were held in 1951 to elect nine councillors. Local Government Act 1960, a new constitution was granted to George Town from 1^st April 1961 which made it self autonomous and also the richest local authority.

The Ramanathan Accusations

But this was shortlived as the functions of the City Council were transferred to the Chief Minister via Transfer Of Functions Order 1966. This occurred due to allegations of maladministration and malpractices by the City Council of George Town ( mainly its first mayor, D.S. Ramanathan from the Socialist Front Party, and later the Alliance Councillor ).

The accusations mounted against Ramanathan in those days are of plain insignificance compared with scandals that rock the world of Malaysian politics nowadays. One of those charges were fraud in the construction of the city’s largest market. This became the basis of a commission of inquiry.

The Nahappan Commision

In 1965, the Nahappan Commission was formed to investigate the functions and to formulate recommendations to improve the services of local authorities. Due to the confrontation of Indonesia against the formation of Malaysian Federation in 1964, the suspension of local government elections were executed even before the commission completed its studies ( read Emergency ( Suspension Of Local Government Elections ) Regulation 1965 And Emergency ( Suspension Of Local Government Elections ) Amendments Regulations 1965 above )

The Nahappan Report

The report of the commission was finally submitted in 1968. It called for the restoration of elected local government but with a new set of rules. The recommendations were the following

• Every state capital should be administered by a local authority and have elective representation. The same should also be extended to all local councils outside state capitals
• There should be one single law applicable throughout the country relating to and governing local authorities, and every state should adopt and enforce the law within six months after it has been passed by parliament
• A local authority should be decentralized and should be an autonomous body corporate consisting of fully elected members with financial and administrative autonomy but subject to the control of State government on matters of national importance and interest
• Party politics should be allowed to continue despite its good and bad aspects and those who wish to remain non-conformist should have the right to stand as ‘independents’ as in the past
• A Local Government Tribunal should be constituted by the State Authority of every local authority

The report was released only in December 1971.

The Analysis Of Nahappan Report

Local Authorities ( Temporary Revision ) Act was enacted in 1973 which implemented the administrative and restructuring recommendations of the Nahappan Report ( read the previous entry of Part 1 )

The Demise of Local Elections

Local Government Act of 1976 was announced three years later. This literally abolished local elections as members of the councils would be appointed not elected and in most cases the chairman would be the District Officer or any civil servant. This is the type of local government we have installed here today.

Epilogue

The revival of the third vote would restore not only the trust of the people but would pave the way towards a more liberal and democratic governance in the country. The verdict on Tuesday, be it positive, could be a landmark decision that would alter the political as well as socioeconomic landscape in Malaysia by giving the voters the right to choose leaders whom they know have the calibre to deliver good services.

Sources

1. Centre For Public Policy Study

2. The Snuffing Out Of Local Democracy In Malaysia ( Prof. Johan Saravanamuttu )

3. Local Government In Malaysia ( Lee Kiyau Loo )

Local Government Elections In Malaysia ( Part 1 )

Introduction

The revival of local government elections, was recently proposed to the Chairman of the Election Commission in an official letter sent by the Chief Minister/Menteri Besar of Pakatan Rakyat states on the eve of the 2^nd anniversary of March 8 political tsunami. It was their hope that both Selangor and Penang could restore the local governance which met an early demise 35 years ago.

It also worth to take note that implementing local government elections was a part of the manifesto that both PKR and DAP have outlined during their campaign prior to the March 2008 elections. And much pressure have been exerted by various groups to honour that promise since then.

The immediate reply from Prime Minister Dato Seri Najib Tun Razak was that local government elections need not be restored. The rejected the idea by quoting that the revival of local elections would result in more politicking and hence would be an obstacle towards improving public service for the rakyat. He also claims that restoration of such elections could not guarantee the quality of municipal services.

The EC Chairman, Tan Sri Abdul Aziz Mohd Yusof, whose initially reply was that such a request needs detail study, has revealed on 20^th March 2010 that the proposal to start local governance in Selangor and Penang will be decided on Tuesday, 23^rd March 2010.

No matter what the verdict would eventually be this coming Tuesday, it is vital that the average Malaysian should learn about the history, functions and benefits of local government elections so that he or she would be well equipped to decide for themselves on the rationale of implementing it in the first place.

Firstly, an attempt will be made to simplify and define laws surrounding this issue so that anyone could have a better understanding in what government policies on local government elections are.

Part 1 : Summary Of Events And Laws Leading Up To The Demise Of Local Council Elections

It would be easier if much emphasis is given to the laws, ordinances and enactments that are related to local governance to highlight the rise and the eventual demise of local government elections. Here is a brief time line and important laws encompassing this issue.

1. Local Authorities Election Ordinance 1950

Enforced by the British, entrusted local councils will organise elections for the office of councillors

2. Local Councils Ordinance 1952

Also enforced by the British, empowers local residents to establish local councils in their area wherever necessary

3. Emergency ( Suspension Of Local Government Elections ) Regulation 1965 And Emergency ( Suspension Of Local Government Elections ) Amendments Regulations 1965

These two enactments led to the suspension of local government elections. The reasons for suspension at that time were the following

1. Internal administrative and political problems facing local councils
2. Violent confrontation against the newly formed Malaysia by Indonesia 1964

4. Royal Commission Of Inquiry On Local Authorities 1965 / Nahappan Report

Headed by Senator Athi Nahappan, was formed to carry out a larger study of the operation of local authorities.

5. Transfer Of Functions Order 1966

The functions of the City Council were transferred to the Chieft Minister to enable a Commision Of Inquiry to inquire on the acts of maladministration and malpractices and breaches of law commited by the City Council of Georgetown

6. Cabinet Committee 1971

Recommended by Minister For Housing And Local Government, Ong Kee Hui, to study the Nahappan Commission’s recommendations

7. Local Government Act ( Temporary Revision ) 1973

Headed by Minister For Housing And Local Government, Ong Kee Hui, who large agreed with the Nahappan Report but proposed restructuring in all basic laws that regulated powers, duties and responsibilities of local authorities

8. The Street, Drainage And Building Act 133 ( 1974 )

Was enacted to serve the purpose of Local Government Act 1973

9. The Local Government Act 171 ( 1975 )

Was enacted to serve the purpose of Local Government Act 1973

10. The Town And Country Act 172 ( 1976 )

Was enacted to serve the purpose of Local Government Act 1973, which consists of

1. Section 18 of TCPA : Prohibits any land use inconsistent with local plans
2. Section 19 of TCPA : Prohibits development that is inconsistent with the Local Plan ( map and written statement on proposal for use and development of land in an area )

11. Local Government Act 1976 ( pay emphasis on this one )

The salient points include

1. Establishment of 12 municipalities and 90 district councils within 3 years
2. All members of these councils are appointed by the State, not elected by the people
3. Marked the demise of local government elections
4. This is the system that we have today

……Coming Soon – Part 2 : History In A Nutshell…..

Laughing Stock / Stok Ketawa 4 : Why The Government Wants To Shy Away From English Scene 4 / Kenapa Kerajaan Mahu Memansuhkan Bahasa Inggeris Babak 4

Exhibit 1 / Lawak Pertama

Question / Soalan

Is there a real existence of the product that is being sold in this catalog? Adakah produk yang dijual dalam katalog in betul-betul wujud?

Answer / Jawapan :

The actual word is supposed to be ‘Remote Control’ not ‘Remove Control’ / Perkataan yang sepatutnya ditulis adalah ‘Remote Control’ bukan ‘Remove Control’

Comment / Komen :

It would be fantastic if we could remove control over the Astro Channels, then we don’t need to subscribe to all the channels but watch them for free / Alangkah bagusnya kalau kita boleh ‘remove control’ ke atas chanel Astro, kita tidak perlu melanggan chanel tetapi boleh menonton semua chanel secara percuma.

Exhibit 2 / Lawak 2

Question / Soalan

Do you understand what the restaurant is trying to sell to you? / Adakah anda faham apa yang dijual oleh dalam menu restoran ini?

Answer / Jawapan

They should be selling Waffle With ‘Honey Syrup’ not ‘Honey Syrub’ / Mereka sepatutnya menjual Waffel With ‘Honey Syrup’ bukan ‘Honey Syrub’

Comment / Komen

Is this a restaurant or a massage parlour because I am curious as to what a ‘Sy-Rub’ is? Adakah ini restoran atau kedai urut sebab saya sangat ingin tahu apa itu ‘Sy-Rub’?

….Coming Soon – Reviving Democracy Via Local Government Election ( Part 1 )……

GST For The Layperson ( Part 4 / Finale )

Part 4 : The Rise And Fall Of GST

This section will discuss the technical problems any administrator and taxpayers that might face with the implementation of GST. A brief description on the advantages and disadvantages of GST will be narrated as well.

Problems Related To Administrators ( Government )

Proper Computer Knowledge And Trained Staff

An efficient computer system and staff capable of handling such technology is compulsory in order to fully carry out the accounting of GST without a hitch. This is required to ensure that auditing and checking revenues from GST is worked out properly.

Printing of GST invoices has to be counterfeit proof and administering the invoice has to be computer based plus has to be synchronized with all the system in the whole country.

Rate Of Tax And Exemption

Steps must be taken to choose a suitable tax rate that will not burden the poor. For example if a lower tax rate is imposed on necessities, this will only benefit the affluent. The rich would spend less but gain more benefits from the concession.

Impact On General Price Level

In the initial phases of implementation, there can be no denial that prices of items will increase. However according to studies, this might just a transient stage and thereafter, GST will not have a huge impact on inflation. This has been witnessed when GST was started in China in 1994 and in Australia. Hence, GST is seen as not inflationary or deflationary either depending on the implementation.

Problems Related To Taxpayers ( Consumers )

Keeping Track Of Accounting

With the implementation of GST businesses will need to keep their accounting records in check. However, most small businesses nowadays don’t have a proper accounting system of their own. It is worth to note that documentation and accounting records influence tax exemptions in the business.

Accounting records are highly useful when government officers perform audit or investigation. In Singapore, accounting records has to be kept by a GST registered trader for at least 5 years.

Education

The public and especially businesses need to be fully aware of the mechanics of GST. This will avoid unwarranted increases in price of goods and services. This will require a comprehensive education campaign.

The Fall Of GST

The following are the bane that plagues the implementation of GST in our country.

1. With a recent price hike in petrol, prices of commodities have increased. Do we need another burden called GST?
2. Income tax brackets for high earners are not as ‘expensive’ as middle-to-low income groups.
3. GST is tax on spending. Everything from parking fees to purchasing mattress. Even with GST-exempted items, this would still hit lower income groups in Malaysia.
4. Private sectors are not paying much to Malaysians, other more developed countries like Singapore could afford this due to higher wages & salaries.
5. Other countries such as Britain, India, Hong Kong, Japan and Singapore has GST – Doesn’t mean GST has to be implemented in Malaysia. Their economic status and way of gaining revenue varies from Malaysia.
6. Inflation may happen despite the staunch rhetoric to deny that fact. Introduction of GST, consumers will end up paying the ultimate price.
7. Corruption is rampant in Malaysia – So businesses has already included ‘corruption prices’ in goods & services. How does that not reflect additional costs to consumers?
8. Out of inflation pressures, higher prices for goods & services are sought.

The Rise Of GST

Instead of painting a grim picture on the perspectives of GST ever being implemented in Malaysia, here are a few goodies that GST could deliver to our doorsteps.

1. Implementation will not be abrupt. It will be a slow & steady tax preparation so that individuals and small businesses will not be adversely affected.
2. It will replace the 10+5% services and goods tax. This means taxes are lower now – Consumers need not pay more for one area, but it’s divided into many other source of ‘tax’ payments.
3. GST rates are promised at 4%, out of the normal 10% or 5% charged in restaurants.
4. Implementation will not occur until middle to late 2011 or 2012. Planning time is essential to not put ‘inflation pressure’ on small businesses.
5. Government’s coffers will increase. This will enable further development and budget control to the country, other than relying just on petroleum or income tax revenues.
6. Tax when consumed, not when earned is much better. It allows better control. Spending influences will be “Careful” and “More controlled” when purchasing on higher prices are made rather than “taxable incomes” generated from work.
7. It’s a broad-based tax system. Some items may be slightly more expensive & cheaper. It’s not a overall standardized taxation method.

Epilogue

The government has to weigh in the pros and cons as well as the correct timing of the implementation of GST so that the burden on the society will not be increased. Much issues has to be expunged ( notably inflation, corruption and accountability ) before the bold step of putting GST into action is done.

And the people of Malaysia, it is your duty to educate yourself on how GST works and how it will effect your livelihood.

Sources

1. Goods And Services Tax, Problems And Effects Of Implementation ( Abood Mohammad Salmeen Lebel )
2. Australian Trade And Taxation Department
3. Singaporean Trade And Internal Revenue Services
4. Making Sense Of GST, Star Online ( Cecilia Kok )

GST For The Layperson ( Part 3 )

Part 3 : The Mechanics Of GST

This part will discuss briefly on how GST works in a nutshell. We will attempt to learn the mechanics of GST through a very easy example. Also what will be taught is the basic calculation anyone could do to determine how much of GST you are paying for any given goods purchased.

GST Made Easy

It is imperative to know that GST is paid at each process involved in the chain of supply. Businesses that has to be registered for GST has a subjective criteria based on the legislation of that particular country, for example

• In Singapore, any business involving more than 1 million Singaporean dollars for the past quarter of the year or exceeds that amount in 12 months has to be registered
• In Australia, all businesses with an annual turnover of $50,000 or more ( $100,000 or more for non-profit organizations ) has to register for GST

When a business is registered for GST, it can claim input tax credit ( read the appendix of the previous entry ) for goods, services or anything that is bought for the business from the Internal Revenue Board / Royal Malaysian Customs. This means that the GST taxes flow along the supply chain and is included in the price paid by the consumer. However remember that consumers cannot claim input tax credits.

Also it should be highlighted that GST rests on the supplier of goods and services, not on the consumer. So, even if the business does not include the GST in the price of goods and services supplied, it still has to pay it to the Internal Revenue Board eventually.

Day A In The Life Of GST

Here we are going to illustrate how GST works with a very simple example which is as realistic as it gets. We will set the GST at 4%.

Goods Supplied	GST Cash Flow	GST Collected
Pak Abu, a timber logger sells timber to Muthusamy, a furniture manufacturer, for RM220 ( including RM9 GST).	Muthusamy pays the RM9 GST to the Internal Revenue Board	RM9
Muthusamy  uses the timber to make a table and sells it to Wai Kong, a furniture retailer, for RM440 (including RM 18 GST )	Muthusamy is entitled to an input tax credit for the RM9 GST included in the price paid to Pak Abu. He offsets this RM9 against the RM18 payable on the supply of the table to Wai Kong and pays RM9 to the Internal Revenue Board	RM9
Wai Kong sells the table to Isabella, a consumer, for RM550 (including RM22 GST)	Wai Kong is entitled to an input tax credit for the RM18 GST included in the price paid to Muthusamy. He offsets this RM18 against the RM22 GST payable on the supply of the table to Isabella and pays RM4 to the Internal Revenue Board.	RM4
Isabella purchased the table for RM550	Isabella bears the full costs of the RM22 GST as consumers cannot claim input tax credits.	Total: RM22

Still don’t get it? It’s alright, let’s break it down again to all the calculations that were done in a very self explanatory manner

• Pak Abu sells to Muthusamy for RM220

-          GST is included by calculating 4/100 x 220 = RM9 GST included to product

• Muthusamy makes a table after purchasing from Pak Abu at RM220 ( including RM9 GST ) and sells it to Wai Kong for RM440 plus RM18 GST

-          Muthusamy sells to Wai Kong for RM440 from the RM220 he purchased from Pak Abu

-          So the Value Added for services here is 440 – 220 = RM220 ( he makes profit here )

-          Then Muthusamy calculates the GST of his product by 4/100 x 440 = RM18 GST

-          Muthusamy then is entitled to claim RM9 GST input tax credit charged on him by Pak Abu so, RM18 – 9 = RM9 GST paid by Muthusamy

• Wai Kong sells the table to Isabella the consumer for RM550 ( RM550 – 440 = RM110 is the Value Added for service charges )

-          The charged GST now 4/100 x RM550 = RM22 GST included to product

-          Wai Kong can claim RM18 input tax credit ( by the GST charged by Muthusamy ) hence the GST paid by Wai Kong to the Internal Revenue Board is RM22 – 18 = RM4

• Isabella as the consumer bears the total cost of tax

-          This amounts up all the taxes in the chain of supply meaning RM9 + 9 + 4 = RM22 ( inclusive in the RM550 of the purchase amount )

Feel as confused as the guy in the picture? Understand the whole process yet? If yes, go through once again at the table before the detail calculation narrated above and it will make more sense to you now. If you don’t get it, please read the example above slowly a couple of times and you will be able to figure it out easily. Don’t worry, you don’t need to be an accountant to figure this out.

Reverse Engineering GST From A Product

Alright, so now that you have understood how GST is included in a particular product sold to the end user / consumer, now let us try to figure out how to reverse calculate the amount of GST in a product that might be purchased by you, the customer

-          Say a watch is purchased at RM1000, how do you determine the GST charged on you?

-          Simple, do a simple algebra like the following with ‘Y’ as the value before GST is added

-          RM1000 = 4/100 x ‘Y’ + ‘Y’

-          Hence, 1.04Y = RM1000

-          Y = 1000 / 1.04 = RM962

-          RM962 is the value before the addition of GST

-          So the GST added is 1000 – 962 = RM38 to the consumer

Plain arithmetic. So long as the GST is 4% you just need to divide the product price with 1.04, and if the GST is 10% use 1.1 instead.

Practice Makes Perfect With GST

So there you have it, the secrets of GST revealed in a nutshell. And of course, most readers would be dumbfounded by the mathematics explained above. As with most things in life, have another or much more glances at the calculations and you will realize that it is simple once you get the hang of it. Let me emphasize once again, you need not be a financial analyst, economist or an accountant to figure it out ( I reasoned it out myself with just proper research )

….Coming Soon – Part 4 : The Rise And Fall Of GST…..

Laughing Stock / Stok Ketawa 3 : Why The Government Wants To Shy Away From English Scene 3 / Kenapa Kerajaan Mahu Memansuhkan Bahasa Inggeris Babak 3

Exhibit 1 / Lawak Pertama

Question / Soalan

What is being sold at this shop? Apakah yang dijual di kedai ini?

Answer / Jawapan :

The actual word was supposed to be ‘Short Pants’ / Perkataan yang sebenarnya seharusnya dieja ‘Short Pants’

Comment / Komen :

We have been buying bottled water and selling soil, but people never knew that even after a short marathon, we could sell  a ‘short pant’ for RM5 / Kita memang biasa membeli air mineral dalam botol and juga menjual tanah, tapi tak pernah kita dengar yang setelah lari merentas desa, kita boleh menjual ‘ cungapan nafas ‘ untuk RM5

Exhibit 2 / Lawak 2

Question / Soalan

Is the intended warning given correctly in the message below? / Adakah betul apa yang dinyatakan dalam amaran dibawah?

Answer / Jawapan :

Nice to see, nice to hold,  once broken, ‘Considered’ sold

Comment / Komen

What a fantastic customer service policy in this shop? We could ‘consider’ to pay for damages if a glassware is broken / Bagusnya perkhidmatan pelanggan di kedai ni, kita boleh ‘mempertimbangkan’ sendiri sekiranya mahu bayar apabila tidak tersengaja memecahkan barangan kaca.

….Next – GST For The Layperson ( Part 3 ) : The Mechanics Of GST….

GST For The Layperson ( Part 2 )

Part 1 : Terminologies Made Easy / What Is GST?

Terminologies Worth Understanding

Before proceeding further in explaining the details behind GST, it is worthwhile to have a grasp on the frequently used terminologies that one might encounter while reading about any taxation system. The appendix at the end of this article will serve as a reference which might make it easier to comprehend GST ( please read below ).

What Are The Types Of Taxes?

The taxpayers are taxed in two ways ( direct and indirect taxes ). Examples of direct taxes are income tax and road tax ( in which taxpayers will definitely realize their tax burden and pay to the government accordingly ). Another way of taxation is through indirect taxes, where taxpayers don’t realize that they are being taxed since the amount of tax is already included in the selling price ( namely GST ).

What Is GST?

GST basically means Goods And Services Tax ( or Value Added Tax ) which is scheduled to replace the current Sales Tax at 5%. It was invented by a French economist called Maurice Laure in 1954.

GST is an indirect type of tax. The cost of tax is finally imposed on the consumer or end user though each step in the supply chain will collect tax and returned to the government.  However, the supply chain can also claim back the GST included in the product that they buy ( a simple way how it works will be depicted in easy to understand diagram in Part 3 : The Mechanics Of GST ).

GST is crucial in the steps leading up to full trade liberalization ( which could mean an early  demise of trade protectionism practiced in the local automotive industry, Proton and Perodua ). This is done by compensating revenue loss ( government money ) by reducing tariffs ( tax on imported goods ) while maintaining gains in production by moving producer prices to world prices. This will make Malaysian business market more competitive internationally ( than choosing to be a village champion / jaguh kampung )

The problem, according to studies ( Emran & Stiglitz 2005 ), is that broader taxes like GST will reduce social welfare because developing countries like Malaysia has a large informal sector ( refer appendix below for definition ).

What Is The Difference Between GST and Sales Tax?

Both sales tax and GST are consumption based taxed ( meaning it is based on how much and what you purchase ).

The main difference is that sales tax is charged on certain classes of locally manufactured goods and similar imported goods. Some goods are not charged if specifically exempted by order of the Ministry of Finance.

GST is broader, and each step of the process from manufacturer to retailer is taxed ( this will be explained in detail with examples in Part 3 ).

…..Coming Soon…..Part 3: The Mechanics Of GST…..

*Appendix

Tariff

-          Tax placed on imported goods and consists of a few types namely – Revenue, Ad Valorem, Prohibitive and Protective

Revenue Tariff

-          Designed to increase government funds

-          For example, a country not growing bananas can create tariff on importing bananas

-          Hence this will allow collecting money from businesses that import bananas

Informal Sector

-          Economic activity that is neither taxed or monitored by government

Input Tax Credit

-          An amount allowed to offset GST included in the price paid for getting a material

GST Exemptions

-          There are some types of supplies that are not subject to GST. These are called GST-free supplies and input taxed supplies

GST Free Supplies

-          Some supplies are not taxable and are called GST-free supplies.

-          If a supply is GST-free, GST cannot be charged on the supply, but input tax credits may be available for anything acquired or imported for use in the enterprise.

-          GST-free supplies include, but are not limited to:

• most food,
• exports,
• most health services,
• most educational supplies,
• most child care services, and non-commercial activities of charities

Input Taxed Supplies

-          If a supply is input taxed:

• GST is not charged on the supply, AND
• input tax credit entitlements are not accrued for anything acquired or imported to make the supply.

-          Input taxed supplies include:

• financial supplies which include most transactions relating to money,
• supplies of residential rents,
• supplies of residential supplies (except for the sale of a new house),
• supplies of precious metals, and
• supplies of food by school tuckshops.

GST For The Layperson ( Part 1 )

Introduction

On 24^th Of November, Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak had announced the introduction of Goods And Services Tax ( also known as Value Added Tax ) to replace the existing Sales And Services Tax ( of 5% ) in the near future. The date scheduled would be roughly in the third quarter of year 2011. It has faced stiff opposition upon tabling in Parliamentary sittings, stating that Malaysians are not ready to deal with the full brunt of a tax that would ultimately make end users ( consumers ) pay for the entire tax imposed on every purchase amounting to the initial 4% proposed ( which will increase as it did in many other countries implementing this policy, see the variation of GST in the countries below ).

The question remains whether the government and most importantly, the citizens of Malaysia, are prepared to embrace this new taxation system wholeheartedly when policy makers do not make it a point to educate the layperson the true nature of this policy and its mechanics. Though it was promised that this system would help bring in a total of RM1 billion in the first year of its implementation, many do not realize that there has been much outflight of capital due to

• Widespread corruption ( a simple example that would strike a chord among readers would be the PKFZ scandal which cost taxpayers around RM 17 billion – equivalent of 17 years of GST ).

• Wastages in expenditure of money in government coffers ( for building crooked bridges linking Singapore )

Malaysia has been stuck with fiscal deficits for more than a decade. The budget deficit is projected to have ballooned to a record high of more than 7% of the country’s gross domestic product (GDP) last year, although the Government is determined to bring that level down to 5.6% of GDP this year, and less than 4% of GDP by 2015. Apparently the Government’s revenues cannot keep pace with the growth of its operating and development expenditures over the 12 years.

There are more examples that could have been stated but the above gives a clear impression on how many issues that has to be dealt with before we start to give GST a chance.

Having said that, if GST implemented in the right atmosphere, could spur economic growth and prosperity. It would bring Malaysia closer towards trade liberalization which is imperative if Malaysians wish to compete on a global business scale. This article will also highlight the benefits of GST shortly.

Hence, the main aim of this article would be raise awareness and educate the layperson on the street about how GST works, what are the stakes that are being raised with its implementation and how would GST affect an average consumer.

….Coming Soon – Part 2 : Terminologies Made Easy / What Is GST?….

Laughing Stock / Stok Ketawa 2 : Why The Government Wants To Shy Away From English Scene 2 / Kenapa Kerajaan Mahu Memansuhkan Bahasa Inggeris Babak 2

Exhibit 1 / Lawak Pertama

Question / Soalan

What does the signage below intends to say or mean? ( Apakah yang sebenarnya dimaksudkan oleh papan tanda dibawah? )

Answer / Jawapan :

The proper word would be ‘Disabled’ meaning for handicapped people ( perkataan yang sepatutnya digunakan adalah ‘Disabled’ bermaksud untuk orang orang keperluan khas )

Comment / Komen :

Disable what? Their handphones, laptop or themselves? Does it also mean that the people using this facility have to dismantle themselves piece by piece and fix themselves back before leaving?

( Disable’ ape? Handphone ke, laptop ke atau diri sendiri? Adakah ini bermaksud orang yang meggunakan kemudahan diatas perlu mengasingkan anggota badan mereka dan memasangkannya semula satu demi satu sebelum meninggalkan tempat itu?)

Exhibit 2 / Lawak Kedua

Question / Soalan

What does this mean when you read an instruction as stated below? ( Apakah maksud arahan dibawah? )

Answer / Jawapan :

It is supposed to be spelt  ‘Closed’ not ‘Cloused’ / Perkataan ‘Cloused’ sepatutnya dieja sebagai ‘Closed’

Comment / Komen

If a native English speaking tourist stumbles upon this signage, he is not only going to be confused, but he might have to be taken to the nearest hospital because he would have started coughing blood ( Sekiranya papan tanda ini diteliti oleh pelancong luar negeri yang fasih Bahasa Inggeris, beliau bukan sahaja akan rasa bingung malah beliau akan dikejarkan ke hospital kerana beliau akan mula batuk darah )

…..Coming Soon…..GST ( Goods And Service Tax ) For The Layperson…..