GST will cancel out cash handout from the outset, says PKR man
KUALA LUMPUR, Oct 15 – Low-income households may end up with a net loss once the goods and services tax (GST) kicks in next year, cancelling out Putrajaya’s Bantuan Rakyat 1Malaysia (BR1M) payout, claimed an opposition lawmaker.
According to PKR’s Kelana Jaya MP, Wong Chen, the consumption tax will cost each Malaysian, including each child around RM270 next year.
“That means the GST cost will be around RM1,080 for a family of four. You can imagine how much worse it will be for families with a lot of children,” he said at the sidelines on a Pakatan Rakyat forum on the 2015 Budget in Subang Jaya, last night.
Wong explained that he calculated the average GST cost for each Malaysian based on a projected net revenue of RM8.5 billion for the federal government from the new consumption tax, divided by the country’s estimated population of 30 million.
He argued that it would be inaccurate to base the impact of GST on the government’s projected net revenue of RM690 million in 2015, claiming that the much reduced figure is based on flawed calculations.
Wong said the first mistake was to deduct the RM3.8 billion in projected revenue loss from goods exempted from GST, stressing that the government cannot deduct a figure that is non-existent.
He added that it was inaccurate to deduct the full BR1M payout of RM4.9 billion from the GST revenue projections, noting that the correct figure that should be used is the difference between next year’s BR1M budget and the projected BR1M expenditure of RM3.6 billion for this year, according to accepted economic convention.
Based on Pakatan Rakyat’s calculations, Wong said the only deductions should be the RM13.8 billion projected revenue loss from the discontinuation of the sales and services tax (SST) and the RM1.3 billion difference between the BR1M budgets for this year and 2015, leaving a nett revenue of RM8.5 billion from GST.
In the 2015 Budget, the government said BR1M for households with monthly incomes of RM3,000 and below will rise by RM300 to RM950, while households with incomes between RM3,000 and RM4,000 will enjoy handouts of RM750, up from RM450 previously.
Putrajaya is bailing out 1Malaysia Development Bhd (1MDB) through several power plant projects worth billions of ringgit, DAP national publicity secretary Tony Pua said today.
Pua, the Petaling Jaya Utara MP, questioned the latest power project awarded to 1MDB – a 2,000MW gas-turbine power plant in Malacca given via direct negotiation.
He said although the government had rescued 1MDB in a written reply to his parliamentary question on a power project awarded to 1MDB, circumstances as to how the tenders were awarded suggested otherwise.
“The government denied that they awarded the projects to rescue 1MDB but the underlying reason is obvious – without a successful IPO (initial public offering), 1MDB is already an insolvent company awaiting a painful bankruptcy which will create an earthquake in the Malaysian Financial Market,” said Pua.
He said the “rapid succession” tenders of multi-billion ringgit power contracts given to 1MDB’s energy arm was proof that the government was “pulling out all stops” to ensure the viability of the IPO.
“This is especially since the company already had to postpone its IPO twice due to unattractive valuations now set for the first quarter of 2015,” Pua said in a statement today.
Pua called Prime Minister Datuk Seri Najib Razak’s administration “so desperate” that it had to hasten the award of the latest contract in Malacca, despite the fact that the gas-turbine power plant was only scheduled for commissioning in seven years’ time, in 2021.
“The Najib administration is so wanton that they have eschewed any further pretence with ‘open tenders’, and have proceeded to award new lucrative contracts directly,” Pua said.
He questioned the haste, noting that key terms such as electricity tariffs had not been set for this contract.
“This is worse than a directly-negotiated contract because there’s no negotiations at all!” Pua said.
Earlier in April, Tenaga Nasional Bhd (TNB) signed another power purchase pact with 1MDB on the construction a solar power plant.
1MDB will design, construct, own, operate and maintain a 50MW solar photovoltaic energy facility in Kedah and supply electricity to TNB.
All the private tenders to supply energy benefited 1MDB to the rakyat’s loss, Pua said, and such “bias” towards the sovereign fund would crowd out the private sector and deter foreign direct investment in Malaysia.
“Ultimately, the losers will be ordinary Malaysians who have to foot higher electricity tariffs as a result of higher tariffs awarded to 1MDB, as well as a drastically reduced competitive environment in the power producer markets,” he said. – October 14, 2014.
Putrajaya bailing out 1MDB by boosting IPO value, says DAP lawmaker
14 October 2014 – TMI
KUALA LUMPUR, Oct 13 — Malaysia has a “severely unaffordable” residential homes market, with housing even more out of reach for its residents than in Singapore, Japan and the United States, according to US-based urban development researcher Demographia.
Demographia’s report was cited today in a report in Singapore’s Straits Times newspaper to highlight how many Malaysians continue to be locked out of the residential housing market despite the federal government’s attempt at helping first-time house buyers.
According to the ST report, Demographia rates housing as severely unaffordable if it is 5.1 times median annual income. Malaysia clocks in at 5.5x, higher than Singapore’s 5.1x, while housing in the United States and Japan is “moderately unaffordable”.
Government data cited by the ST report shows that since 2012 median monthly household income has risen eight per cent annually to RM4,258, slower than the average housing price increase of 10 per cent to RM280,886.
The country’s consumer price index has risen by an average of 3.3 per cent this year and Putrajaya had warned it may spike by 5 per cent next year, tripling the 2013 average.
In presenting Budget 2015 last Friday, Prime Minister Datuk Seri Najib Razak introduced a Youth Housing Scheme that will waive down-payments and subsidise ownership by up to RM10,000 for 20,000 married couples under 40.
Najib also said the government would provide another 80,000 new homes priced at RM100,000 to RM400,000 under the 1Malaysia People’s Housing Programme (PR1MA).
Both schemes, including the existing My First Home (MFH) scheme are only for households with a combined monthly income of less than RM10,000.
According to Bank Negara only a third of My First Home applicants received loans in the first year, as banks refused to take risks.
And PR1MA has seen just 761 buyers for the 160,000 units launched since 2013.
Despite more cash handouts, lower income tax and a multitude of items exempt from the goods and services tax (GST), consumer groups said Budget 2015 was not enough to offset rising living costs for Malaysians.
Federation of Malaysian Consumers Association (Fomca) CEO Datuk Paul Selvaraj said consumers would still had to pay a premium for housing as well as petrol because of the lack of public transport.
He also said the lack of government enforcement would give rise to profiteering once the GST was implemented April next year at a rate of 6%.
“It looks like the government has taken certain measures to minimise the impact of GST, many are zero-rated, while there is no tax on petrol.
“But our concern is profiteering. I am concerned that sellers will take advantage of the GST and increase the actual price, so zero-rated items will be sold at inflated prices,” Selvaraj told The Malaysian Insider.
“We feel that all items should be labelled – what is zero-rated and what is taxed. The government should also set up a hotline for consumers to turn to if they are unhappy with their purchase.”
Prime Minister Datuk Seri Najib Razak announced yesterday when tabling the budget that the GST was expected to raise RM23.2 billion in revenue. But RM3.8 billion in zero-rated goods would be deducted from this amount.
Selvaraj also said that despite petrol prices having gone up from last week’s subsidy cut, the government did not address alternatives for the rakyat to wean them off their fuel dependency.
On October 2, the government reduced the fuel subsidy of the RON95 petrol and diesel by 20 sen. Petrol now costs RM2.30 a litre compared with RM2.10, while diesel costs RM2.20 compared with RM2 previously.
“The bus system is not being addressed, and it’s to the point that there is no choice for the ordinary people except to rely on their cars to commute.”
Another issue for the average consumers, said Selvaraj, was housing, with homes either being beyond their means or located too far from the city centre that they would have to pay a premium on petrol for their daily commute.
“There have been many efforts to create affordable housing, but the government hasn’t done enough to make it difficult for speculators to enter the market. The market should have stronger regulators.”
Consumers Association of Penang (CAP) president S.M. Mohamed Idris said he was sceptical that prices would go down once the GST was implemented, despite the long list of exempted items, including RON95 petrol, diesel, noodles, coffee and tea.
“Even if those are exempt, input cost will go up. Transport cost, the cost of raw materials… in the end, you will still pay more,” he told The Malaysian Insider.
“CAP has never agreed with the GST because we say it’s a regressive tax. They should have implemented the more progressive inheritance tax.”
Mohamed also shrugged off the government’s decision to lower income tax by one to three percentage points, noting that this would not benefit the lower-income groups who did not make enough to qualify for income tax.
“We’re talking about only rich consumers benefitting from this. Can you imagine how many millionaires will now be taxed even less? They should have introduced different income tax rates instead.”
Are Pakatan supporters exempted from GST, asks Kit Siang over Najib’s MCA speech
If Prime Minister Datuk Seri Najib Razak is to be believed, 52% of Malaysians need not go along with Barisan Nasional (BN) policies, said the DAP today.
DAP parliamentary leader Lim Kit Siang said this was the logic behind Najib’s speech yesterday at the MCA assembly, where the premier had said that the Chinese community could not make demands of the BN and then vote for Pakatan Rakyat (PR).
Lim said the premier’s speech goes against one of the main tenets of a functioning democracy – that citizens have a right to demand justice from the government of the day, regardless as to who they voted for.
“How can Najib claim to be prime minister for all Malaysians when he is arguing the case to be unfair to the 52% of the Malaysian electorate who had not supported the BN in the 13th general election who comprised all communities in Malaysia, whether Chinese, Malay, Indian, Kadazan or Iban?
“Or is Najib prepared to give a quid pro quo to the 52% electorate to justify the government’s lack of fairness in policy and implementation by exempting them from payment of all forms of taxes including the GST to be implemented in April next year?”
Najib, when opening the MCA’s 61st annual general assembly yesterday, had said that BN would only be fair to the Chinese if they supported the ruling coalition instead of PR.
“I’d like to do more, maybe one day I can do more. But I also need the Chinese community to support BN. Come on. You have to do your part.
“You can’t demand and then support DAP. You can’t demand and then support PR. You demand, you support BN, we will be fair to the Chinese,” said Najib.
MCA suffered its worst defeat during the general election last year, winning only seven out of the 37 parliamentary seats and 11 of the 90 state seats it contested in the 13th general election.
The Prime Minister’s remarks have attracted a storm of protest from almost everyone.
“What Najib said yesterday was offensive and obnoxious,” said Lim.
“Najib’s implicit message is obvious – that the Chinese community cannot expect the government to be fair if they do not support the BN.”
Putrajaya appears to have overpaid some RM490 million to 930,000 households last year in the form of the 1Malaysia People’s Aid (BR1M), PKR’s think tank said today.
The Institut Rakyat today said this was based on conflicting figures given by Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar yesterday and Prime Minister Datuk Seri Najib Razak when announcing the 2012 BR1M allocations three years ago.
“Previously, the government boasted that BR1M had been given to those households earning less than RM3,000 per month, representing 5.2 million or 80% of all Malaysian households in 2012,” the think tank’s executive director, Yin Shao Loong, said in a statement.
However, in Parliament yesterday, Wahid revealed that about one-third or two million of Malaysian households still earned less than RM3,000 per month, which equalled to 28.7% out of seven million households.
“Did 3.2 million households suddenly clear the RM3,000 per month threshold? Is this a temporary effect of BR1M injections or a more serious statistical error on the part of government?
“This question is important because it has serious implications on the accuracy and accountability of government spending. It is also important for national clarity about the true size of low-income households.”
Yin also said that figures from the Department of Statistics for 2012 showed that 38.5% of households earned below RM3,000 per month, while the Economic Planning Unit in the PM’s Department reported that 38.8% of households earned below RM3,000 the same year.
“If the statistics from the department is right, it may mean that the government overpaid BR1M to 930,000 households in 2013, representing an estimated overspend of RM490 million.”
He questioned whether the amount paid was a statistical error or a more “cynical attempt” to gain votes ahead of the 13th general election in May last year.
“The government is slashing subsidies and implementing GST in order to improve its revenue, yet there could be millions or billions misspent due to miscalculations or statistical manipulation.”
“The government and the Auditor General’s office must account for this,” he said.