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Thursday, May 8, 2014

Najib explains the GST – Sakmongkol AK47

MAY 06, 2014

I said it earlier that one of the unspoken reasons for having the goods and services tax (GST) is to catch out the tax evaders. In parliament, BN MPs liked to talk about how efficient GST is. How it can raise revenue for the government. Never once in parliament did any one of the BN people talked about how GST can be used to nab the tax dodgers.

The Umno people have even gone one step further – by claiming that the majority of the tax dodgers are Chinese. The Chinese are therefore engaged in activities denying the Malay led government of funds which can be used to better living conditions of the Malays. Umno cannot abandon any racist undertones in any of its policies.

The government knows who the tax dodgers are.

They have files on them. The question is why haven’t actions been taken against them? Is the government protecting some of the bigger culprits? Tax evasion constitutes a drain on government’s income. So do illegal transfer of funds, illegal lotteries, embezzlement of public funds which are reported year in and year out by the Auditor General; corruption and plain overpricing constitute further leakage. Government purchases and spending on brainless projects construe a big drain on government coffers.

The reason why this government is using GST to plug the leaks, because it thinks no one can escape paying consumption tax. They must consume and therefore cannot run away. GST is like the dragnet, mopping up everything in its path.

Except of course the tax dodgers themselves, they will find ways to escape. The illegal bookies, the underground and parallel economy will continue to prosper and laugh at the stupidity of the government. Illegal transfer of funds – all those ill-gotten gains obtained through unreported cash transactions, the commissions earned will continue to escape the government dragnet.

The government should have acted firmly against tax dodgers. They know who they are. The kepala ikan restaurants, the Malay owned firms, the Chinese business mandarins, the heavenly kings, the operators of illegal lotteries, businesses which ought to be taxed but not- if the government knows their identities, why didn’t they go after them? Why use GST as a pretext to punish the collateral sufferers- the people and fixed income earners who will end up paying for dearer goods and services. Prime Minister Datuk Seri Najib Razak has gotten it wrong. And now even the poor men of god, the imams and muftis are shamelessly joining the chorus exhorting people to accept GST.

The BN government can settle the score immediately; by opening up all the files on the tax evaders and make them pay. The government knows who they are but are in cahoots with tax evaders. NAZA motors for example have not been paying due taxes , but each time their files comes up for review, there will instructions from the top to keep the files back. What about the other big guns? Ask the IRD to reveal who are the tax dodgers and get the government to take action on them. The banks? The corporate players? Check all of them.

Now where does PM get the notion that the majority supports GST? Which majority? The majority who actually voted in GE13 did not support BN. now BN is coming out with a disastrous policy aimed at increasing their coffers because they have not be able to spend within their means and expect it to be supported by the 53% of the voter population who did not vote BN. the majority was represented by those who came to the Bantah GST 501 rally last weekend.

PM doesn’t understand it, the reason why so many people don’t pay income taxes is because they don’t have enough income. Small income families send children to study because for them that is an escape route from grinding poverty. They sell whatever they have. Elder sisters sell their bodies to finance younger brothers and sisters. Malay girls work as GROs to help families back home. Kampong folks sell land which they have only TOL as consideration to trade. So the reason why only slightly more than 1 million pay taxes, is because the rest don’t have enough income.

Will the PM now finally acknowledge that one of the reasons why we will have GST is to use it as dragnet to scrape everything in its path? The main and only reason they are doing this is because they have run out of money to finance their reckless spending? And also because it is now more difficult for the government to borrow because it has not shown financial discipline? They want more money to finance their operations?

Who says the GST is progressive? The fixed income and salary earners will pay a higher proportion of their given income on GST. This is what makes the GST regressive not you pay more tax as you consume more. Even this simple feature is not understood by the PM.

RM100 allocated to GS by a person who earns RM1500 month is not the same as RM100 allocated by a person who earns RM10, 000 monthly. Unless the government is prepared to implement multilevel GST. Impose higher GST in higher income group. 6% paid by a person who earns RM1500 and the same by another who earns RM10, 000 does not produce equitable effects. Remember its 6% on the goods and services not on income.

“Consume less, lah” is the knee jerk answer by BN. make your own foodstuff and things you need. These kinds of answers ought not to be given by lawmakers. The BN government blames the people for its failed policies.

The PM has not been sharp enough. He is still using the clichéd argument that because 160 countries used GST, then it must be good. The country which Obama came from which is also the most powerful economy in the world does not use GST. The main reason why most of the 160 countries want GST is that each of them wants more money in their own pockets. The tin pot despots and dictators want more money to install gold toilet seats and gold taps. Some other countries want more money to finance their much-organised welfare policies on housing, on health, on cash payments to the needy.

Let us remind PM Najib that the purpose of a tax system is to redistribute wealth and not fund the functions of the federal government. The government must take steps to ensure tax dodgers are caught and be made to pay. –, May 6, 2014.

* Sakmongkol AK47 is the nom de guerre of Raub MP Datuk Ariff Sabri Abdul Aziz.

*This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

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