• Responding to Critiques of the Pakatan Harapan Alternative Budget 2018 (Part 2) – Abolishing Toll Highways

    Media Statement by Dr. Ong Kian Ming, Member of Parliament for Serdang, on the 10th of November 2017

    Responding to Critiques of the Pakatan Harapan Alternative Budget 2018 (Part 2) – Abolishing Toll Highways

    Last week, I addressed those who criticised Pakatan Harapan’s proposal in our 2018 alternative budget to get rid of the GST.[1] Today, I want to address those who are sceptical of our proposal to abolish the toll highways.

    Response 1: The government has paid billions of RM in compensation to the toll concessionaires and will continue to compensate them billions of RM to defer hikes in toll prices

    The sceptics who question the financial viability of our proposal to buy back the toll concessions has to examine the BN government’s current policy which has been to (i) compensate toll companies to defer toll hikes (ii) extend the concession period in lieu of compensation and (iii) allow unreasonable toll hikes to take place.

    The compensation formula to defer toll hikes is based on current traffic volumes and the toll hike amount that is in the concession agreement. The compensation paid out by the federal government is far more favourable to the toll concessionaires compared to the alternative of buying back the tolls since the latter is based on the cost of construction of the highway (more on this below).

    For example, if the toll rate was supposed to go up from RM2 to RM4 in 2018 and the government does not allow the toll increase to take place, the government has to compensate the concessionaire RM2 multiplied by the total number of vehicles which will use the toll in 2018. The higher the toll hike in the concession agreement, the higher the compensation which the government has to pay. (See sample Compensation Amount in Appendix 1 below)

    The compensation cost payable by the government (if the toll rates are not allowed to be hiked) FAR EXCEEDS the cost of buying back the toll highways from the concessionaires! Indeed, according to a parliamentary reply, the government has already forked out RM4 billion from 1990 to 2015 for compensation to toll companies including RM1.05 billion for the LDP and RM443 million for SPRINT, two of the earliest and most lopsided toll concession agreements! (Appendix 2 below)

    Response 2: The government has and continued to subsidize the construction of toll highways in lopsided deals which favours the toll concessionaires

    The compensation stated above does not include the many millions and billions of RM which the government has given and lent to the toll concessionaires for the construction and / or upgrading of the tolls.

    For example, my colleague Tony Pua, pointed out back in 2012 that the government had given a grant worth almost RM1 billion to the concession holder for the MEX highway which was 74% of the total construction costs of the project.[2] In my own constituency of Serdang, a new interchange was built on the MEX highway for entry and exit into Seri Kembangan at a cost of RM90 million out of which RM20 million was provided by the government as land acquisition costs. But the revenue and profit from the additional RM2.20 toll collection per car for this new entry and exit benefits only the toll concessionaire.

    Rather than continue to subsidize these toll concessionaires, it makes more financial sense for the government to buy back these tolls and fund any new construction or highway upgrades from its development expenditure.

    Response 3: The costs of acquiring the toll concessions is cheaper than the costs of compensation plus the costs to drivers

    In every highway concession agreement, there is always a clause for the government to buy back the toll concession using a certain pricing structure based on ‘national interest’.

    The buy-back terms and conditions is usually a combination of:

    • the construction costs, less the liabilities and obligations of the concessionaire and government grants, if any.
    • The Government is further obliged to compensate the concessionaire an internal rate of return of between 8% to 12% on the share capital only for the years it was in operation. If the operator is already enjoying returns above and beyond the stipulated rate of return above, the Government does not have to make the ‘internal rate of return’ compensation.
    • The buy-back terms and conditions does NOT compensate the concessionaire based on future profits.[3]

    Writing back in 2009, my colleague Tony Pua estimated that it would cost the government RM1.4 billion to buy back the LDP highway concession.[4] The government had already paid out RM628 million to LITRAK, the owner of the LDP concession, at the end of 2008.[5] This amount has ballooned up to RM1.05 billion at the end of 2015. If the government does not want to continue to pay this compensation, it must allow the LDP toll rate to increase to RM3.10 (for passenger cars), which is a ridiculous amount to pay to get stuck in one of the notorious LDP traffic jams during peak hours!

    Instead of questioning why PH is recommending that the government buy back these toll concessions, our sceptics should be asking why DOESN’T the government immediately carry out these buy-backs given the long term financial benefits for the government as well as the road users.

    Response 4: The government has no political will to enforce the toll agreements with the concessionaires which explains why it is very reluctant to acquire the tolls concessions

    A common frustration expressed by motorists is that they are often stuck in traffic jams before and after toll highways. In other words, they are paying to be stuck in traffic jams! For example, in my own constituency of Serdang, traffic jams during peak hours start from the Mines shopping center all the way to the BESRAYA toll at Sungai Besi, a distance of about 3km.

    What many drivers do not know is that there are clauses in the BESRAYA concession agreement which states that the concessionaire must take mitigation measures to resolve these traffic jams or face the consequences. For example, if the highway concessionaire cannot maintain a Level of Service (LOS) “C” in terms of traffic flow along this highway, it must introduce off-peak toll rates which are at least 10% lower than for the peak period in order to divert traffic to off-peak times. (The evening peak hour LOS at BESRAYA is at the “F” level or bumper to bumper traffic). If this still doesn’t work, the concessionaire must upgrade the toll plaza and the toll highway to achieve LOS “C” traffic flow. During the period of upgrading works, the concessionaire must pay the government an amount equivalent to 10% of the estimated costs of upgrading works per month for the inconvenience caused until the upgrading work is completed. Although these conditions are in the supplemental concession agreement with BESRAYA, it has never been enforced even though the traffic conditions along the BESRAYA highway immediately after the Sungai Besi toll plaza has gotten worse since 2014 (the year of the most recent supplemental agreement).

    This example clearly shows that the government has no political will to exercise the conditions which are clearly stated in the various toll concession agreements. The toll concessionaires have strong lobbying power which they have, no doubt, put into good use in ‘forcing’ the government not to buy back these tolls, to continue to pay them excessive compensation and not to enforce the conditions stated in these agreements.

    Notice that the government has no problems in ‘convincing’ toll concessionaires which are loss making to allow the government to buy them back. For example, the Eastern Disposal Link (EDL) in Johor has been facing financial difficulties right from the start and was in danger of declaring bankruptcy.[6] This was one of the toll highways where tolls will be abolished as announced in Budget 2018. The way in which this will be done is through a government buy-back of the EDL. The total cost has not yet been announced. This example clearly shows that if the government has the political will, a toll buy-back plan can be implemented on a financially sustainable basis.

    Response 5: PH will pay proper compensation as stipulated in the concession agreements in the toll acquisition process but will need complete access to ALL the toll concession agreements

    Some people fear that PH’s proposal to buy back these toll concessions will cause uncertainty in the markets since many of these concessions are owned by public listed entities or by Government Linked Investment Corporations (GLICs) such as EPF, Khazanah and PNB. PH will clearly follow the terms and conditions as set out in the concession agreement for the toll buy-backs. The toll concessionaires will earn an acceptable rate of return for their investment in these highways (but not earn supernormal profits).

    For PH to evaluate the total cost of acquiring all of the toll highways, we would need access to ALL the toll concession agreements. Although some of them have been declassified, others such as the MEX as well as the PLUS highway concession agreements are still classified under the Official Secrets Act (OSA). The toll buy-backs will take place only after a careful study of all the terms and conditions in these concession agreements and in a way which is responsible and fair to the government, to the tax payer, to the road users and to the concessionaires.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    Appendix 1: Sample Toll Concession Compensation Amount

    CA = Σ[AT x (2 x TV)] – TA; where:-
    CA: The amount of compensation payable in respect of the relevant
    Operating Year
    Σ: The summation for all classes of vehicles
    AT: The Agreed Toll which should have applied for the relevant Operating
    Year for the particular class of vehicle
    TV: The actual traffic volume for the particular class of vehicle in the
    preceding six (6) months
    TA: The aggregate toll collected by the Concession Company for the
    relevant Operating Year

    Appendix 2: Total compensation paid to Toll Concessionaires from 1990 to 2015

    [1] http://ongkianming.com/2017/11/02/media-statement-pakatan-harapans-alternative-budget-responding-to-the-critiques-part-1/

    [2] https://dapmalaysia.org/english/2012/mar12/bul/bul4907.htm

    [3] The exceptions are the PLUS owned highways whose concession agreements were renegotiated after PLUS was privatized in 2011. The terms of conditions of the new concession agreement have not been declassified at the time of writing.

    [4] http://www.thenutgraph.com/buy-back-of-privatised-highway-concessions-more-cost-effective/

    [5] http://tonypua.blogspot.my/2009/01/lets-take-our-highways-back.html

    [6] https://www.nst.com.my/news/nation/2017/06/249424/two-highway-companies-risk-bankruptcy

  • 希望联盟替代财政预算案:点评公众争议(篇章一)




    其中主要针对希盟替代预算案的争议,是围绕着我们撤除消费税(GST) 主张极为不负责任和不现实。而我的点评有如以下:


    点评一:首先,我们不会撤除整个消费税系统。所有在销售税(SST)制度下没有被征税的项目都将会被列入零税率名单。所有在销售税(SST)制度下被征税的物品则会被继续征同样的税率。 简而言之,我们将利用现有的消费税系统来征收与销售税有关的费用。


    点评二:大多数马来西亚人不知道“零税率化”的真正含义,或零税率和免税商品之间的差异。 反正对消费者而言,最终的影响就是他们不再需要支付消费税,因此与撤除消费税的主张无异。





    点评四:首先,许多基本商品和服务不被列入消费税名单的说法并不完全准确。例如,政府表示银行服务是免消费税。但事实上,无论你在网上转账给朋友还是员工,都必须按照金融交易的成本支付6%消费税。 如果你从MEPS提款机上提款,也必须支付6%消费税。简而言之,在很多人民认为不需要缴交消费税的环节,实际上都必需还很多消费税。


    由于价格管制法,消费税不就算能被转嫁给消费者,但其他人必然需承担该成本。例如,公共交通工具如德士费用不受消费税影响。但是,德士的维护费用及保险费用都需要缴纳消费税。 这意味着要么德士司机必需承担消费税的成本(比较大可能性)或德士公司需要承担这些成本(可能性较低)。



    同时,实施消费税并不能保证能减少流出国外的非法资金(避税的另一种形式)。马来西亚被一所非盈利的全球金融诚信机构(GFI)评为排在全球非法资金外流第5高的国家。 [1] 其他排在前5的三个国家,包括俄罗斯,墨西哥和中国,分别都有实施消费税或增值税。因此,我们真正需要的是一个致力于透明化施政和不被个人利益者独裁的政府,尤其是涉及数十亿令吉非法资金流动的个人银行账户,方能防止这些非法资金流动活动继续恶化下去。

    有些评论也认为,征收消费税将减少大企业通过在低税率国家转移利润来逃税的可能性。[2] 尽管爱尔兰拥有23%的增值税,但其12.5%的低公司税仍然吸引了许多跨国公司将利润置放和转移到该国。欧盟一直在努力限制这些从低税率国家获得公司税减免的做法,[3] 但这是归功于欧盟一个拥有法律效力的制度框架,而非消费税的出现。然而,东盟并没有这样的制度框架。比如,如果大马政府有一天会对在新加坡转移利润(由于相对低17%公司税率)的马来西亚企业采取行动,我反而会感到很惊讶。


    点评六:与个人所得税相比,实施消费税的确能扩大税收基本盘。全国只有15%-20%的工作人士达到缴交个人所得税的门槛,反之,每个人都必须在消费,购买商品和服务时支付消费税。 但是这也是为何消费税属于累退税的主要原因,因为它将税收负担从那些有资格纳税的少数富裕人口转移到收入不足以缴交所得税的多数人口。

    即使如此,在马来西亚的情况下,实施消费税能将扩大税收基本盘的说法不完全准确。从理论上讲,实施消费税和降低个人所得税,应该会减少全国个人所得税收入的百分比。相反的,我国通过个人所得税所征收的总收入的百分比已经从2014年的11.1%(实施消费税前)上升到2018年预计总收入的13.4%。尽管对于那些每年赚取2万至7万令吉的个人所得税已下降了2%。在2017年和2018年,国家预计从个人所得税所获得的收入总额将从301亿令吉增加到322亿令吉,增长幅度高达7%。尽管这部分的增长可能是包含2018年工资调整和年终奖金的增加,但我们也不能否认国内税务局会将采取更积极的策略来追讨个人退税,和派遣更多税务官员(根据2017年10月30日在The Edge财经日报的报道)上门讨税(参阅下面一)。

    参阅下面一: “Tax Officials to knock on more doors” The Edge Financial Daily, 30th of October 2017

    有评论也认为,实施消费税将使我们能够对愿意购买奢侈品的消费者征税。举个例子,实施消费税将能够让政府从销售价值超过1亿令吉钻石戒指的交易中上征收超过600万令吉的收入。 但我们别忘记,如果这颗钻石戒指(和其他类似的奢侈品)是在海外被购买,那么马来西亚政府将无法从钻戒的交易中征收消费税。







    争议九:大多数税务专家和经济学家都认为,实施消费税是一件好事。 他们都错了吗?








    [1] http://www.gfintegrity.org/issues/data-by-country/

    [2] https://www.malaysiakini.com/columns/400124

    [3] https://www.cnbc.com/2016/08/30/european-union-orders-ireland-to-recover-up-to-14-billion-in-back-taxes-from-apple.html

  • Bajet Alternatif Pakatan Harapan: Jawapan balas kepada kritikan (Bahagian 1)

    Kenyataan Media oleh Dr. Ong Kian Ming, Ahli Parlimen Serdang pada 2 November 2017

    Bajet Alternatif Pakatan Harapan: Jawapan balas kepada kritikan (Bahagian 1)

    Saya telah meneliti pelbagai komen dan ulasan terhadap Bajet 2018 yang diumumkan oleh Perdana Menteri pada Jumaat lepas, serta Bajet Alternatif Pakatan Harapan 2018. Saya ingin mengambil peluang ini untuk membalas beberapa kritikan yang ditujukan kepada Bajet Alternatif Pakatan Harapan bermula dengan cadangan kami untuk menghapuskan GST.

    Salah satu kritikan utama terhadap Bajet Alternatif Pakatan Harapan adalah ia tidak realistik atau bertanggungjawab kerana mencadangkan penghapusan GST. Berikut merupakan maklum balas saya terhadap beberapa kritikan tersebut:

    1) Kritikan: Syarikat-syarikat telah membelanjakan jutaan ringgit bagi melaksanakan sistem GST. Bukankah duit tersebut dibazirkan jika GST dimansuhkan begitu sahaja?

    Jawapan: Kita tidak akan memansuhkan sistem GST. Kesemua barangan yang tidak dikenakan cukai semasa perlaksanaan SST akan dijadikan barangan ‘sifar GST’. Kesemua barangan yang dikenakan cukai pada titik pengeluaran semasa perlaksanaan SST akan dikenakan kadar cukai yang sama pada titik pengeluaran. Kita akan menggunakan sistem GST yang sedia ada untuk mengutip cukai SST ini.

    2) Kritikan: Mengapa anda menyatakan akan menghapuskan GST, sedangkan sebenarnya GST hanya ditukar ke kadar sifar?

    Jawapan: Majoriti rakyat Malaysia tidak mengetahui makna ‘mengsifarkan’ GST atau perbezaan antara barangan ‘sifar GST’ dan barangan yang dikecualikan. Namun, kesan cadangan kita adalah pengguna tidak perlu membayar GST yang bermakna kita memang telah menghapuskannya.

    3) Kritikan: Adakah harga barangan dan perkhidmatan akan turun akibat daripada penghapusan GST? Bukankah semasa perlaksanaan GST pada 2015 dan 2016, cukai GST telah diserap masuk ke dalam harga barangan dan perkhidmatan? Bukankah harga barangan dan perkhidmatan sebenarnya ‘kaku’ (lambat bergerak) untuk menurun?

    Jawapan: Apabila kita memansuhkan GST, pengguna akan menjangkakan penurunan harga. Walau pun peruncit-peruncit tidak menurunkan harga sebanyak 6%, persaingan tetap akan timbul antara peruncit-peruncit untuk memberi diskaun bagi menarik pembeli. Penghapusan GST akan memberi tekanan untuk mengurangkan harga secara keseluruhannya.

    Selain itu, dengan mengutip cukai yang sedikit (dengan berbalik ke sistem SST), kita secara langsung mahupun tidak langsung memulangkan semula duit tersebut kepada para pengguna dan peniaga, dan ini akan memberi kesan pengganda (multiplier) yang sihat terhadap ekonomi.

    4) Kritikan: GST bukanlah begitu regresif memandangkan ada banyak barangan yang dikecualikan cukai dan / atau berkadar sifar!

    Jawapan: Pertama, tanggapan bahawa banyak barangan asas dan perkhidmatan tidak dikenakan GST adalah tidak berapa tepat. Sebagai contoh, kerajaan mengatakan bahawa perkhidmatan perbankan dikecualikan dari GST. Namun pada hakikatnya, apabila anda melakukan transaksi atas talian semasa menghantar duit kepada kawan atau pekerja, anda perlu membayar 6% GST ke atas kos transaksi itu. Jika anda dicaj untuk mengeluarkan duit melalui mesin MEPS ATM, anda juga perlu menanggung 6% GST atas caj tersebut. Sebenarnya, ada banyak barangan dan perkhidmatan yang dikenakan GST sedangkan ramai yang beranggapan bahawa tiada GST terhadap barangan dan perkhidmatan tersebut.

    Kedua, walau pun sesuatu barangan dikecualikan GST, ia tidak bermakna bahawa harganya tidak akan meningkat selepas GST diperkenalkan. Sebagai contoh, walaupun harta kediaman dikecualikan GST, ini hanya bermakna bahawa pemaju tidak boleh mengenakan cukai 6% ke atas harga jualan akhir harta itu. Bahan binaan dan kos pakar yang digunakan untuk pembinaan masih tertakluk kepada GST. Ini bermakna kos GST sebenarnya telah dimasukkan ke dalam harga jualan akhir harta tersebut.

    Dalam kes di mana kos GST tidak boleh dikenakan terhadap pengguna seperti mengikut pekeliling harga, maka pihak lain yang akan terpaksa menanggung kos tersebut. Sebagai contoh, pengangkutan awam seperti tambang teksi tidak dikenakan GST. Namun kos penyelenggaraan teksi dan polisi insuran adalah tertakluk kepada GST. Ini bermakna pemandu teksi atau syarikat teksi (kurang mungkin) yang perlu menyerap kos tersebut.

    5) Kritikan: Penghapusan GST memudahkan individu dan syarikat untuk mengelak cukai

    Jawapan: Kita masih akan menggunakan sistem GST untuk mengutip cukai berdasarkan sistem SST. Maka, sistem laporan sama yang sepatutnya meningkatkan ketelusan cukai masih akan diguna pakai.

    Pada masa yang sama, GST bukanlah satu jaminan bahawa aliran wang haram ke luar negara  (salah satu cara mengelak cukai) akan berkurangan. Malaysia disenaraikan di tangga lima teratas dunia dari segi aliran wang haram oleh badan penyelidik Global Financial Integrity (GFI).[1] Tiga daripada negara lain adalah Russia, Mexico dan China yang juga mempunyai sistem GST atau cukai tambah nilai ketika kajian dijalankan. Apa yang diperlukan untuk mengurangkan aliran wang haram ini adalah sebuah kerajaan yang komited terhadap ketelusan dan tidak dipengaruhi oleh agenda dan kepentingan sendiri terutamanya jika melibatkan berbilion Ringgit haram yang masuk keluar dari akaun peribadi.

    Salah seorang pengulas telah mendakwa bahawa GST akan mengurangkan kemungkinan syarikat untuk mengelak pembayaran cukai dengan memindahkan keuntungan mereka ke negara yang rendah kadar cukai.[2] Walau pun Ireland mempunyai kadar cukai tambah nilai 23%, namun kadar cukai korporatnya yang rendah pada tahap 12.5% tetap menarik syarikat-syarikat multinasional untuk menindahkan keuntungan ke negara tersebut. Kesatuan Eropah (EU) telah cuba untuk mengurangkan amalan sebegini di mana syarikat-syarikat mendapatkan pengurangan cukai daripada negara-negara di mana cukai korporat rendah[3], namun ini hanya dapat dilakukan kerana terdapat rangka institusi di EU yang mempunyai kuasa undang-undang, dan bukan disebabkan oleh GST. Tiada rangka sebegini di ASEAN, maka jika kerajaan hendak mengejar syarikat yang menyimpan keuntungan mereka di Singapura kerana kadar cukai korporatnya yang rendah, iaitu 17%, saya sudah pasti teruja untuk mengetahui hal ini.

    6) Kritikan: GST memperluaskan asas pencukaian. Jika GST dihapuskan, asas pencukaian akan dikecilkan

    Jawapan: Adalah benar bahawa GST memperluaskan asas pencukaian negara dengan mengenakan cukai terhadap lebih ramai individu berbanding dengan cukai pendapatan peribadi. Hanya 15% hingga 20% golongan pekerja yang membayar cukai pendapatan peribadi sedangkan GST dikenakan kepada semua orang melalui semua barangan dan perkhidmatan yang digunakan. Namun, ini adalah sebab mengapa GST dikatakan sebagai cukai regresif kerana ia mengalihkan beban bayaran cukai daripada golongan yang mampu kepada semua lapisan masyarakat, di mana majoriti daripada mereka tidak meraih pendapatan yang mencukupi untuk dikenakan cukai pendapatan. 

    Walaupun begitu, hujah bahawa perlaksanaan GST memperluaskan asas cukai tidak semestinya tepat dalam konteks Malaysia. Secara teori, perlaksanaan GST dan pengurangan cukai pendapatan peribadi sepatutnya mengurangkan peratusan keseluruhan hasil yang dikumpul melalui cukai pendapatan. Namun, apa yang berlaku adalah peratusan keuntungan yang dikumpul melalui cukai pendapatan telah meningkat daripada 11.1% pada 2014 (sebelum GST) kepada 13.4% keseluruhan hasil pada 2018. Ini berlaku walaupun adanya pengurangan 2% cukai pendapatan di kalangan golongan berpendapatan antara RM 20,000 dan RM 70,000. Jumlah keseluruhan cukai pendapatan yang dikumpul dijangka akan meningkat sebanyak 7%, iaitu daripada RM 30.1 bilion pada 2017 kepada RM 32.2 bilion pada 2018. Walaupun sebahagian daripada kenaikan ini mungkin disebabkan oleh peningkatan gaji dan bonus pada 2018, kita tidak boleh menolak kemungkinan bahawa LHDN mungkin akan menggunakan strategi yang lebih agresif untuk mendapatkan bayaran cukai tertangguk seperti yang dilaporkan oleh Edge Financial Daily pada 30 Oktober 2017 (Lihat Rajah 1).

    Rajah 1: “Pegawai cukai memburu lebih ramai pengelak cukai”, The Edge Financial Daily, 30 Oktober 2017

    Seorang pengkritik telah mendakwa bahawa GST akan membolehkan kita mengenakan cukai lebih terhadap mereka yang berbelanja mewah. Beliau memberi contoh bahawa dengan adanya GST, lebih daripada RM6 juta boleh diperoleh daripada hasil jualan cincin permata berharga lebih daripada RM100 juta. Mungkin beliau terlupa bahawa jika cincin tersebut (atau barangan mewah lain) dibeli di luar negara, Malaysia tidak boleh mengenakan GST terhadap cincin tersebut.

    7) Kritikan: GST merupakan cara paling berkesan untuk meningkatkan pendapatan kerajaan.

    Jawapan: Ini memanglah sebab mengapa Pakatan Harapan begitu komited untuk menghapuskan GST. Dalam keadaan kepayahan ekonomi atau jika kerajaan terpaksa meningkatkan pendapatan tambahan untuk ‘bailout’ dan belanjawan mega bagi projek infrastruktur, cara paling mudah adalah dengan meningkatkan GST berbanding memotong perbelanjaan lain. Meningkatkan GST sebagai pendapatan tambahan negara akan mengenakan kesan buruk terhadap golongan kurang berkemampuan memandangkan golongan inilah yang paling terjejas oleh peningkatan harga. Adakah akan ada sesiapa yang terkejut jika BN terpaksa meningkatkan kadar GST jika mereka memenangi PRU ke-14 dan memerlukan wang tambahan bagi membayar kos 1MDB atau ECRL?

    8) Kritikan: Bagaimana dengan lebih dari 100 negara lain yang telak melaksanakan GST?

    Jawapan: Negara-negara yang telah melaksanakan pencukaian GST boleh dikategorikan kepada dua. Kategori pertama adalah negara maju di mana majoriti golongan pekerja memperoleh pendapatan yang mencukupi untuk membayar cukai pendapatan. Pengalihan beban cukai daripada pembayar cukai pendapatan kepada pengguna tidak mempuyai kesan besar terhadap mereka, memandangkan majoriti daripada penduduk cukup kaya untuk menyerap cukai nilai tambah.

    Bagi kebanyakan negera membangun, sistem kutipan cukai masih lemah untuk mengutip jumlah keuntungan yang mencukupi daripada cukai pendapatan dan cukai korporat. Oleh itu, perlaksanaan GST merupakan satu cara untuk mempertingkatkan sistem kutipan cukai mereka dan juga merupakan cara untuk memperoleh pendapatan tambahan.

    Malaysia masih belum cukup kaya untuk dikategorikan dalam negara maju terutamanya dari segi peratusan penduduk yang cukup pendapatan bagi membayar cukai pendapatan. Namun kita bernasib baik kerana adanya sistem kutipan cukai yang cukup cekap melalui Lembaga Hasil Dalam Negeri (LHDN) dan Jabatan Kastam. Dengan ini, Malaysia mempunyai pilihan untuk menangguhkan perlaksanaan GST sehingga status negara maju dicapai. Kewangan kerajaan masih utuh sebelum GST, dan tiada sebab untuk berfikir kita tidak dapat bertahan tanpa GST di bawah kerajaan baru dengan adanya mandat untuk mengurangkan pembaziran serta amalan rasuah.

    9) Kritikan: Kebanyakan pakar ekonomi dan pencukaian bersetuju bahawa perlaksanaan GST merupakan sesuatu yang bagus. Adakah mereka silap?

    Jawapan: Kebanyakan pakar pencukaian bekerja dengan firma audit seperti PwC dan Ernst & Young. Mereka akan mendapat manfaat daripada perlaksanaan GST dari kerana akan dicari ramai untuk nasihat pencukaian dan perkhidmatan pengauditan mereka. Kurang kemungkinan untuk mereka bersuara menentang perlaksanaan sebuah dasar yang boleh menguntungkan mereka.

    Majoriti pakar ekonomi mengikut teori konvensional berhubung pencukaian yang telah disebut di atas. GST merupakan cukai asas-luas yang lebih efisien berbanding jenis cukai lain. Namun majoriti pakar ekonomi kurang bercakap tentang kesan rasuah terhadap kewangan kerajaan. Kurang teori ekonomi konvensional berhubung perkara ini  kecuali untuk menyatakan bahawa rasuah memberi kesan buruk kepada ekonomi dan kewangan kerajaan. Soalannya, berapa banyak? Adakah ahli ekonomi telah menganggarkan berapa banyak penjimatan yang dapat diperoleh melalui pengurangan rasuah dan pembaziran dalam kerajaan? Pada pengetahuan saya, data sebegini masih belum ada di Malaysia. 

    Perlu diingat bahawa kebanyakan pakar pencukaian dan ahli ekonomi berada di peratusan 20 teratas dari segi pendapatan dan golongan ini kurang merasai beban daripada perlaksanaan GST berbanding golongan pendapatan bawah 40 (B40).

    10) Kritikan: Kita tidak berdaya menyingkirkan GST kerana jurang kewangan yang terlalu besar untuk dirapatkan.

    Jawapan: Kami telah menunjukkan dalam Bajet PH bahawa pembaziran dan rasuah dapat dipotong sebanyak RM20 bilion yang hampir dapat menutup jurang kewangan RM25 bilion akibat daripada penghapusan GST dan penukaran semula ke cukai SST.

    Namun memandangkan ini merupakan topik penting, saya akan menerangkan maklumat ini dalam kenyataan media yang lebih lanjut.

    Dr. Ong Kian Ming
    Ahli Parlimen Serdang

    [1] http://www.gfintegrity.org/issues/data-by-country/

    [2] https://www.malaysiakini.com/columns/400124

    [3] https://www.cnbc.com/2016/08/30/european-union-orders-ireland-to-recover-up-to-14-billion-in-back-taxes-from-apple.html

  • Pakatan Harapan’s Alternative Budget: Responding to the critiques (Part 1)

    Media Statement by Dr. Ong Kian Ming, Member of Parliament for Serdang, on the 2nd of November 2017

    Pakatan Harapan’s Alternative Budget: Responding to the critiques (Part 1)

    I have been digesting the comments and commentaries made about the 2018 Budget announced last Friday by Prime Minister Najib and also the Pakatan Harapan Alternative Budget for 2018. I want to use this opportunity to address several critiques directed at the PH Budget starting with our proposal to abolish the GST.

    One of the major critiques levelled against the PH Alternative Budget is that we are not being responsible or realistic by advocating for getting rid of the GST. The following are the responses to some of these critiques:

    1) Critique: Companies have spent millions if not billions in implementing the GST system. Won’t all this money be wasted if we get rid of the GST?

    Response: We will not get rid of the GST system. All of the items which were not taxed during the SST regime will be ‘zerorised’ i.e. 0% GST tax rate. All of the items which were taxed at the point of production during the SST regime will have the same tax level at the point of production. We will use the existing GST system to collect the SST related taxes.

    2) Critique: Why not say you will ‘zerorise’ the GST rate rather as opposed to saying that you will get rid of it?

    Response: Most Malaysians don’t know the meaning of ‘zerorising’ the GST or the difference between goods which are zero-rated versus exempt. The effect on the consumer will be that they no longer have to pay the GST so this effectively means we are getting rid of it.

    3) Critique: Will there by a reduction in the price of goods and services if you get rid of the GST? Wasn’t the GST already priced in during the implementation phase in 2015 and 2016? Aren’t the price of goods and services ‘sticky’ downwards?

    Response: When we get rid of the GST, consumers will expect prices to go down. Even if retailers don’t decrease prices by 6%, there will be competition between retailers to offer at least some discounts in order to attract customers. Getting rid of the GST puts downward pressures on prices on the whole.

    Also, by collecting less taxes (by going back to the SST regime), we are directly and indirectly putting money back into the wallets of consumers and business and this will have a healthy multiplier effect on the economy.

    4) Critique: But the GST is not really that regressive because many items are tax-exempt and / or zero rated!

    Response: Firstly, the impression that many basic goods and services are not subject to the GST is not entirely accurate. For example, the government has said that banking services are exempt from the GST. But in reality, whenever you transfer money online to your friend or your employee, you have to pay the 6% GST on the cost of the financial transaction. If you are charged for withdrawing money from a MEPS ATM, you will have to pay the 6% GST on that charge. There are many such items whereby GST is charged on areas which many in the public thinks they do not have to pay GST on.

    Secondly, just because an item is exempt from GST does not mean that the price of that item will not increase post-GST. For example, even though residential property is GST exempt, this merely means that the developer cannot tack on a 6% GST charge on the final price of the property. The inputs i.e. the construction materials and the professional fees which goes into the building of that property is still subject to GST. This means that the cost of the GST will be implicitly included in the final property price.

    In cases where the cost of the GST cannot be passed on to the consumer because of price regulation, others have to bear the cost. For example, public transportation such as taxi fares are not subject to the GST. But the cost of maintaining the taxis and also the insurance policies for the taxis are subject to the GST. This means that either the taxi drivers have to bear the increase in these costs due to the GST (more likely) or their taxi companies need to absorb these costs (less likely).

    5) Critique: We are making it easier for people and companies to avoid tax by getting rid of GST

    Response: We will still be using the existing GST system to collect taxes that will be based on the SST regime. Hence, the same reporting system that was supposed to have increased tax transparency will still be in place.

    At the same time, having the GST is no guarantee that the amount of illicit financial flows out of the country (another form of tax avoidance) will be decreased. Malaysia was ranked as one of the top 5 countries in terms of illicit financial flows by the non-profit research organization, Global Financial Integrity (GFI).[1] Three of the other countries in the top 5 list namely Russia, Mexico and China had GST or value added taxes during the time period of the study. What is needed to decrease these illicit flows is a government which is committed to transparency and not dictated by self-interest especially when it comes to illicit financial flows of billions of RM in and out of personal bank accounts.

    One commentator has also said that having a GST will make it less likely that companies will evade tax by parking their profits in low tax countries.[2] Despite the fact that Ireland has a value added tax of 23%, its low corporate tax rate of 12.5% continues to attract many multinational companies to park their profits in this country. The European Union (EU) has been clamping down on these practices of getting income tax breaks from low corporate tax countries[3] but this is due to the EU having an institutional framework that has the force of law, rather than the presence of the GST. There is no such framework in ASEAN and I would be surprised to learn, for example. if the government would go after Malaysian companies which park their profits in Singapore because of its relative low corporate tax rate of 17%.

    6) Critique: GST broadens the tax base. If we get rid of the GST, we are narrowing the tax base

    Response: It is true that the GST broadens the tax base by taxing a larger number of people compared to the personal income tax. Only 15% to 20% of the working population earn enough to pay personal income taxes whereas everyone has to pay the GST through the goods and services consumed. But this is the very reason why the GST is regressive since it shifts the tax burden from those who are rich enough to pay income tax to the larger population, the majority of whom don’t earn enough to pay income tax.

    Even then, the argument that implementing the GST will broaden the tax base is not necessarily accurate in the context of Malaysia. Theoretically, implementing the GST and reducing the personal income tax rate should decrease the % of overall revenue collected via the personal income tax. Instead, the % of total revenue collected via the personal income tax has increased from 11.1% in 2014 (pre-GST) to a projected 13.4% of total revenue in 2018. This is in spite of the 2% reduction in the income tax rates among those who earn between RM20,000 to RM70,000. The total personal income tax collection is projected to increase from RM30.1 billion in 2017 to RM32.2 billion in 2018, an increase of 7%. While some of this increase could be due to increasing wages and bonuses in 2018, one cannot discount the possibility that the Internal Revenue Board (IRB) will pursue a more aggressive strategy in chasing after back taxes from individuals and have their tax officials ‘knock on more doors’ as reported in the Edge Financial Daily on the 30th of October, 2017 (See Figure 1 below).

    Figure 1: “Tax Officials to knock on more doors” The Edge Financial Daily, 30th of October 2017

    One commentator also said that having the GST will allow us to tax those who consume heavily especially in luxury items. The example he cited was that GST would enable more than RM6 million to be collected on the sale of a diamond ring costing more than RM100 million. Perhaps he has forgotten that if this diamond ring (and other such luxury items) was bought overseas, then Malaysia would not be able to collect the GST for this diamond ring.

    7) Critique: The GST is a very effective way of raising revenue for the government.

    Response: This is very reason why Pakatan Harapan is committing ourselves to getting rid of the GST. In times of economic hardship or if the government is forced to raise additional revenue for bailouts and massive infrastructure spending, the easiest way to increase this revenue is by raising the GST rather than cutting expenditure in other areas. Increasing the GST as a way to raise additional government revenue has adverse effects especially on the poor since they are the ones most susceptible to sudden price increases. Would anyone be surprised if the BN government is forced to increase the GST rate if they win GE14 and need to raise additional revenue to bailout 1MDB or to pay for the ECRL, for example?

    8) Critique: What about the more than 100 countries which have implemented GST?

    Response: The countries which have implemented some form of value added tax such as the GST can be divided into two categories, more or less. In the first category are the developed countries whereby most of the working population earn enough to pay income taxes. Shifting the tax burden from income tax payers to the consumer does not have significant adverse effects in these countries since their citizens, by and large, are rich enough to absorb the value added taxes.

    For many developing countries, their tax collection systems are too weak to collect significant amounts of revenue from personal income and corporate taxes. Hence, implementing the GST is a way for them to improve their tax collection system and also a necessary means of raising additional revenue.

    Malaysia is not rich enough to be categorized as a developed country especially in terms of the % of the population which earn enough to pay personal income taxes. But we are fortunate to have a relatively competent tax collection system under the Internal Revenue Board (IRB) and to a lesser extent, the Customs Department. Given this, Malaysia had the choice of postponing the implementation of the GST until we reach the status of a developed economy. The finances of the government were relatively intact prior to the implementation of the GST and there is no reason to think that under a new government, with a new mandate to decrease wasteful expenditure and corrupt practices, cannot survive without the GST.

    9) Critique: Most tax experts and economists agree that implementing the GST is a good thing. Are they all wrong?

    Response: Most of the tax experts work for auditing companies such as PwC and Ernst & Young. They stand to gain from the implementation of the GST in terms of increased business from tax advice and auditing services. It is unlikely that they would speak out against the implementation of a policy from which they stand to gain financially.

    Most economists follow the conventional theories regarding taxation some of which has been highlighted above. GST is a broad-based tax that is more efficient compared to other forms of taxation. But most economists don’t have much to say about the effects of corruption on government finances. There is less conventional economic theory on this except to say that corruption is bad for the economy and for government finances. But by how much? Have economists estimated how much we can save through the reduction of corruption and wastage in the government? Not to my knowledge, at least not in the case of Malaysia.

    It is also worth noting that tax experts and economists are most likely to be in the upper 20% of the income bracket and thus, are not likely to feel the brunt of the implementation of the GST in the same way as someone in the B40 income bracket.

    10) Critique: We cannot afford to get rid of the GST as the financial gap is too big to cover.

    Response: We have shown in the PH budget that we can cut wastage and corruption by as much as RM20 billion which is almost enough to fill the financial gap of RM25 billon as a result of getting rid of the GST and reverting to the SST tax rates.

    But since this is an important topic, I will dedicate an entire statement to explain this in greater detail.

    Dr. Ong Kian Ming
    Member of Parliament for Serdang

    [1] http://www.gfintegrity.org/issues/data-by-country/

    [2] https://www.malaysiakini.com/columns/400124

    [3] https://www.cnbc.com/2016/08/30/european-union-orders-ireland-to-recover-up-to-14-billion-in-back-taxes-from-apple.html

Page 3 of 21912345...102030...Last »