Laughing Stock / Stok Ketawa 6 : Why The Government Wants To Shy Away From English Scene 6 / Kenapa Kerajaan Mahu Memansuhkan Bahasa Inggeris Babak 6

Exhibit 1 / Lawak Pertama

Question / Soalan

What is really being said here about a special offer in a shop? Apakah yang sebenarnya ingin ditujukan kepada pelanggan di kedai ini?

Answer / Jawapan :

The actual word is supposed to be ‘50% Discount’ not ‘50% Dicount’ / Perkataan yang sepatutnya ditulis adalah ‘50% Discount’ bukan ‘50 Dicount’

Comment / Komen :

The shop would lose a lot of customers since there is a 50% extra profit because it has been ‘Di-Count-ed’/(Counted in Malay colloquial terms). Kedai tersebut akan kehilangan pelanggan kerana harga barangan telah naik setelah harga 50% extra telah ‘Di-Count’/(Dikira).

1 ‘S’Care Scheme/1Care Malaysia Explained (Part 3 – The Aftermath And The Remedy)

Reeling From The Aftermath

Repercussions

Faced with rising trends of medical expenditure, the federal government will be dogged by limited and painful options to defuse the crisis:

1.    Raise the 1Care payroll tax and incomes taxes on the non aged to sustain the failing 1Care Scheme

2.    Necessitate higher premiums for 1Care among the aged and increase their deductibles and copayments

3.    Reduce payments to hospitals and physicians

The full brunt of the burden will be directed towards the public when the system becomes faulty beyond remedy.

Physicians will opt out of the 1Care Scheme as their fees will be slashed to lower levels. Patients will need then need to pay higher out of the pocket settlements to their doctors who are no longer under the 1Care Scheme.
The aged and the non working class, who have little or minimum wage, will have to face a less forgiving reality that their benefits to subsidy will be greatly reduced.

The working population, with already  rapidly diminishing disposal income will find it extremely difficult to come to terms with a scheme that requires them to be taxed higher and receive very little benefit from such health policy.

Recommendations

It is time that the government stepped up to the plate and educates the nation on their intentions behind the 1Care Scheme. Let it not be a half baked policy reminiscent of the recent SBPA debacle (that still remains unresolved till this date) as the stakes are much higher and a bigger calamity looms in the horizon if the scheme is not reviewed with due diligence.

It would be pertinent, for the time being (while 1Care Scheme is being mulled upon), that the following recommendations be considered :

1.    Assess the agent status of the majority of practitioners (whether they are they are perfect or imperfect agents for the proposed health care system)?

2.    Take all steps possible, and in a transparent manner, to convince the nation regarding the relevance of the 1Care Scheme (including the detailed explanation of safety nets provided as a contingency)

3.   Establish the importance of primary care facilities are the major players and the gatekeepers to tertiary care. The government should (like their other developed counterparts) pay more emphasis on training more general specialists than having a compartmentalized highly subspecialized health care system.

Meanwhile and until it is acceptable to the public, minor tweaks or reforms could be made to the pre-existing healthcare system to make its function far superior than the one being practiced currently:

1.    The symbiotic relationship between health care provider and patients is strongly encouraged in the hopes that patients themselves could be an active participant (and agents of cost reduction) in the system

2.    The reduction in overreliance of services provided by the privatization of healthcare, thus curbing progressive increase in market prices by decreasing the percentage of the population who seek inexpensive medical treatment (due to insurance premiums and lower out-of-pocket payments) which could be prove to be economic vicious cycle

3.    Corporatization of health care services (rather than a full change in the health care system) permits better operations management and greater accountability of a highly complex organization such as the primary health care system (better clinical governance)

4.    Careful and gradual integration of new information technology advancements to the pre existing service delivery system (e-mail consultation for example) which could ultimately reduce cost and lead times

For Further Reading

1. http://www.globalissues.org/article/774/health-care-around-the-world#Healthasahumanright

2. http://wangsamajuformalaysia.blogspot.com/2012/02/1care-malaysia-and-abcds-salaries.html

3. http://www.themalaysianinsider.com/sideviews/article/malaysian-health-reform-socio-economics-david-kl-quek/

1 ‘S’Care Scheme/1Care Malaysia Explained (Part 2 – The Hypothetical Model)

Hypothesized 1Care Scheme Anatomy

Care Scheme As The Utility Towards Managed Care

With the escalating rate of medical expenditure in the country, a cost containment approach has to be put in place to eradicate or replace an ailing healthcare system that burdens the economy. One such option would be the 1Care Scheme. Given the very sketchy information on how this would be implemented, one could only draw inferences from other similar healthcare systems.

Bearing that in mind, it would suffice to say that the scheme would promote the technique of ‘managed care’ (by managed care organizations or MCOs) where the autonomy of patients is sacrificed and replaced by a predetermined set of rules. These rules govern patient’s rights to which doctor, the type of care and the kind of medications he/she receives. Many of us are aware of this issue has been given much focus in the previous attempts to describe the proposed health system in the media.

This has, in the past, led to reprisals mainly arising from public dissatisfaction. This was due to denial of care stemming from government legislation and tight labour rules that restricts the access one has to healthcare options. Employers would then offer private health care plans (which are private insurance plans) to fill in this vacuum so that employees could afford all available treatments. Ultimately (and to the contrary of cost containment), this incident would give rise to the ballooning of medical expenditure in the country.

Free Treatment For All, Really?

Unless the full blueprint is made public, one could only hypothesize the magnitude or the process of financing involved in the 1Care Scheme which is the crux of understanding how the whole system functions.

The population might be divided up to two broad classes namely
1.    The general public

2.    Concessional patients (the ageing public, citizens below the poverty line, disabled/handicapped)

It will be compulsory for all working citizens of the general public, who have wages within the taxable bracket, to pay 10% of their earnings as contribution necessary for the funding of the scheme. Remember that this 10% tax does not mean that one is entitled to the type of care, it is just a contribution which is used to pay the wages of the physicians and other miscellaneous expenses (purchase of new equipments or subsidizing the concessional patients etc.). This will be collected as federal taxes.

Secondly, to be amenable to treatments within the system, the general public will have to take up an insurance policy (social health insurance). Treatments within this system will be closely regulated by MCOs which could mean that a patient might not be covered for a wide range of interventions (eg. optical surgeries, prosthesis, aesthetics etc.).

Just one burning question – Is the scheme really free in a manner that it provides universal healthcare in a similar vein to the current system? Will drugs be free now that payments have been made by contributing to taxes and insurance schemes? Read on carefully.

So much focus has been given to the taxable amount that we need to contribute but the society has become oblivious about other aspects of the mandatory payments that one has to make in order to get the full package of services available. In summary, this would be the likely formula for the 1Care Scheme :-

Social health insurance (SHI) + General taxation + minimal Co-payments for a defined Benefits Package

The fundamentals of SHIs and general taxation have been explained in detail earlier. What are Copayments and Benefit Packages that are also an inherent part of the formula though?

Of Copayments, Benefit Packages And Additional Private Health Insurances

Copayments are payments that have to be made by patients when their treatment has exceeded the threshold tolerated by the health scheme. Thus, a patient has to fork out a certain amount of money once the treatment requires more financial assistance due to the nature of their illness. Benefit packages seem define the type of insurance from which special group within the population will be stratified accordingly to separate those who deserve exemption from payments or their treatments costs partially subsidized.

Extrapolating from the statement above, even the casual layperson would demand an explanation by posing several questions below:

1.    It was said that free treatment will be given to all. But what are these copayments then?

2.    Will there be copayments for drugs? Is there a minimum pricing policy?

3.    Which class of society will be eligible to total subsidy and exempted from all payments?

4.    How will the general public gain access to other treatments that the SHI does not cover?

To minimize copayments, steps will be taken to provide cheap but ‘equally’ good quality drugs or services determined by the MCOs. This is called the minimum pricing policy, a key policy issue that has been very much in the shadows since the planning of 1Care policy.

MCOs will only allow more patient autonomy if they willing to endure an additional cost by purchasing an additional private insurance which will bestow certain benefits:

1.    Patients will now be provided with the added benefits which are not covered by the SHI policy

2.    Patients will be able to then choose doctors and types of procedures (dental/optical/physiotherapy that was previously not available in the SHI scheme)

Rise In Public Health Care Burden Secondary To Rise In Market Demand

The trend of an increase in purchase of additional private health insurance will influence the increase in demand of services as a whole. With the access to an affordable yearly insurance premium, the growing population will have a lowered out-of-the pocket price to pay when seeking medical treatment. This will directly lead to the increase in market demand for health care services for the medical needy and indirectly cause the sudden surge of prices for medical services.

With the increase in slow increase in inflation rates in Malaysia (upward trend towards the level of 3.3% in December 2011), larger spectrum of the working population would be pushed into the higher marginal tax brackets. This would often leave citizens with lesser disposal income for their utilization.

In line with this scenario, many tax payers would prefer out-of pocket medical expenses be paid before-tax ringgit than after-tax ringgit (which is subject to tax imposition) by purchasing health insurance. Thus this will inexorably increase market demand and simultaneously increase prices of medical services, especially if it is poorly regulated and unprepared.

——-> Continued (Part 3 – The Aftermath And The Remedy)

1 ‘S’Care Scheme/1Care Malaysia Explained (Part 1 – Introduction)

Introduction

In the last few weeks there has been sporadic debate on the proposed national health scheme dubbed 1Care in both the internet and the mainstream media. A collective conclusion shared by both the public and the very professionals alike (who play a major role in the system) is the uncanny ability to fully comprehend the confusing entity which remains an uncertainty till today.

This commentary was written to achieve the following objectives:

1.    To help the public understand why this system was proposed and what led to the genesis of this  scheme

2.    If possible, to pressure the government to be more transparent in providing information on the 1Care Scheme to allay fears among the general public

3.    To help the layperson understand the un-addressed policy issues but highly crucial perspectives surrounding the 1Care Scheme

First, it would be wise to have a quick update on the prevailing Malaysian Health Care system so that it would help shine some light as to why there is a sudden accelerated interest to bring the 1Care Scheme into an imminent reality.

The Malaysian Health Care Scenario

The Malaysian Health Care System has often been hailed globally for its ability to endorse a sustainable health policy that reflects an outstanding and equitable health status at a relatively low economic burden. By allocating just 3 percent of its GDP to health care (majority of industrialized countries invest rough about 6 percent, with the exception of the United States which devotes 16 percent), data compiled by World Health Organization shows that the performance of the Malaysian health system is, in fact, highly efficient. This is evidenced by the “Health Adjusted Life Expectancy”(HALE) at birth indicator, which categorizes Malaysia as equal to most industrialized countries at 63 years.

However, the complexity of the system has also brought in much uncertainty that has not only slowed down service delivery, but has been closely related to the gradual increase in economic burden.

In an effort to make health care accessible (and most importantly equal) to all fabrics of the society, the concept of Universal Health Care was formulated and adopted by most countries around the world including Malaysia. The system attempts to finance the health benefits for all by a balance of tax revenues and medical insurance (mostly recommended by private health caregiver in Malaysia currently). This is imposed on employed, working class population. In Malaysia, much of the public medical fees are subsidized to a great extent from the much gained tax revenues.

It is important to note that the Malaysian Ministry Of Health only manages to recover 3 percent of its total operating cost through fees collected at health care premises. The amount is strikingly lower than most payments made in most European health system (which employs the co-payment system where funds are partly subsidized by the government and the insurance premium paid by the patient). The average consultation at a token rate of RM1 at any primary care centre barely covers 1 percent of the economic cost per visit.

The resulting non sustainable system calls for fiscal limitations and will eventually cause much financial loss due to

1.    The spur of an unrealistic and unachievable demand for public health care

2.    The operational costs to cover universal health care will surpass the government’s current fiscal capacity

By understanding this, it comes as no surprise that the proposed 1Care Scheme is  a platform designed to re-coup the wastages  from a bleeding pre-existing ( but noble and functional if properly handled) health care system that is sub-optimally managed. Like any other subsidized policies, the current health care system is resilient to any structural reform partly due to the lack of political will (where it is vital to appease voters by holding on to the unsustainable RM1 token fee and RM15-20 token fee paid at primary and specialist health clinics respectively) and the society itself whom have become so accustomed to enjoying cheap but scarce medical resources that has been perpetually vulnerable to potential abuse all these years.

The Single Most Important Question (Where Is The Information?)

Unlike most countries that have proposed and implemented such a scheme, information on the mechanics and the policies enshrined in the health care scheme is widely available for public scrutiny. One could easily access any updates and knowledge on the health care scheme through the Ministry Of Health website of the respective countries.

The same cannot be said for the 1Care system. The public, at large, have very patchy ideas on the health scheme without corroborative evidence from the Ministry Of Health. It would have been prudent, with all the disparate views available from all avenues of the mass media, to allay all concerns by allowing the public to peer into the workings of the proposed scheme or at least highlight the salient points that matters most to the average Malaysian. Efforts to make it an intellectual discourse by taking in question from the public would have been highly commendable.

Strangely, the documents or information regarding its modus operandi has remained elusive and is not available on the Ministry Of Health website (which is mandatory in most civil nations). The reason as to why this has been enshrouded in secrecy remains anyone’s best guess. However, one could only speculate that perhaps the precise knowledge of the system is within the confines of a privileged few elites who are still, themselves, grappling to reach a consensus on how to implement a scheme that is totally not viable given the current economic climate.

——-> Continued (Part 2: The Hypothetical Model)

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…..