GST-free 40

KUALA LUMPUR: Basic foodstuffs like rice and fresh vegetables and part of utilities such as water and electricity will be exempted from the proposed goods and services tax (GST).

They are part of some 40 basic goods and services that will be free from GST, Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said when opening a one-day national conference on the GST in Kuala Lumpur yesterday.

It is understood that sugar, poultry, eggs, public transport and health services, among others, will also be exempted from GST. The exemption on these items will help consumers, especially those in the lower-income group, in line with earlier statements by the government that the GST would not burden this particular group.

The government plans to introduce GST at four per cent next year.

It is a multi-stage and broadbased consumption tax on goods and services. It will replace the current sales tax and service tax.

The Goods and Services Tax Bill was tabled for first reading in Parliament last December. The second reading has been scheduled for next month.

More than 140 countries have implemented GST, also known as valued-added tax in some nations. Countries with populations with less purchasing power like
Venezuela, Kazakhstan, Brazil, South Africa, Thailand, Sri Lanka and Sudan, already have the tax regime in place.

Businesses are expected to save RM4 billion with the GST, while exporters stand to save up to RM1.4 billion.

“The possibility of revenue loss through the understatement of taxable value at an earlier stage in the production and distribution chain would be overcome with the implementation of GST,” Husni said.

“With higher tax compliance, the government can generate additional revenue which will go back to the rakyat through socioeconomic development.”

The government is keen to hear public views so that fine-tuning can be made to ensure successful implementation of the GST.

Fuel price by car size

The bigger your car, the more you will have to pay for petrol from May 1.

This is because the Government is going to change the way fuel is subsidised.

It is planning for a fuel pricing mechanism that will ensure only targeted groups, particularly those from the lower-income, will receive fuel subsidy.

Also, foreigners who drive into the country to fill up their tanks will not be eligible for subsidy and will have to pay more for fuel.

“The bigger the engine, the higher petrol will cost,” Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said yesterday.

The move was based on the assumption that those in the lower income group would normally drive a car with a lower engine capacity and thus be eligible for the subsidy, he said.

“For RON95 petrol, the subsidy is 30 sen per litre. The current price of RON95 petrol is RM1.80 compared with the actual price of RM2.10.

“Malaysians who are not eligible are those who drive a higher engine capacity car or non-Malaysians. They will have to pay RM2.10 or more for RON95,” he told a press conference after launching the new corporate identity of the F&N soft drinks division here yesterday.

Besides introducing the new structure, the ministry also plans to make the use of MyKad compulsory when buying petrol.

“There are some Thai nationals who drive into Malaysia to fill up their tank because petrol is such an expensive commodity in their country,” he said.

In Muar. Deputy Prime Minister Tan Sri Muhyiddin Yassin said the Government was in the final stages of drafting a policy on the fuel subsidy which will be a “win-win situation” for both the Government and the people.

He said that the new policy would identify people who were eligible for subsidy.

Umno Youth chief Khairy Jamaluddin had previously broached the subject about giving petrol subsidy to the right people. He said the subsidy must reach only the people who needed it most and giving subsidy across the board was a misallocation of funds.

On the subsidies for flour, sugar and gas, Ismail said they would be retained.

“Although the price for sugar has been increased by 20 sen, the Government is still providing subsidy for the commodity,” he said.

Ismail food outlet operators should not take advantage of the increase in sugar price to mark up the price of their products.

“Food outlet operators should not regard this as an opportunity to raise prices,” he said.

Sugar up 20 sen, bread price freed

Sugar will cost 20 sen more per kilogramme from today, with the new price being RM1.65 in the peninsula and RM1.75 in Sabah and Sarawak.

Domestic Trade, Cooperatives and Consumerism Ministry secretary-general Datuk Mohd Zain Mohd Dom, who made the announcement yesterday, said the government would also withdraw its subsidy for white bread from today and remove the commodity from the price-control scheme.

He said the increase in the sugar price was necessitated by the rise in the price of raw sugar in the world market and that the government still subsidised the price at 80 sen per kg at a cost of RM1.008 billion a year.

"The subsidy on sugar is retained and the amount is much higher than the subsidy last year, which was RM720 million. However, as the world price of raw sugar has risen sharply, especially since August, from US$0.14 (0.47 sen) to US$0.16 per pound to US$0.27, the government has to raise the price of sugar."

Otherwise, Zain said, the government subsidy would rise to RM1.26 billion this year, based on the country's estimated consumption of 1.26 million tonnes of sugar next year.

He said the new sugar price, was relatively low compared with prices in other Asean countries such as Thailand (RM2.50 per kg), Singapore (RM3.05), Indonesia (RM3.40) and the Philippines (RM3.62).

Zain said an analysis by the ministry indicated that the impact of the price increase on sugar-based products was minimal, about one sen for canned drinks and a cup of tea.

"For canned drinks of 325ml with an estimated sugar content of 39g and a cup of tea with an estimated sugar content of 40g, the impact on the price of the two drinks is 0.8 sen.

"The highest impact is on condensed milk.

"For the 505g can with an estimated sugar content of 228g, the impact on the price is 4.6 sen, which is less than five sen."

Zain said that the ministry would soon hold discussions with the relevant associations to advise them against raising the prices of sugar-based products because the impact on their prices was minimal.

"Enforcement and price monitoring officers will go down to the ground to check on the prices of sugar-based products and advise against too high a raise in prices, if such was the case."

On white bread, he said traders could raise the price of the commodity from today based on their consideration. -- Bernama

GST brings bigger savings

Pay less for phone bills, food and beverages.

Telephone bills, food and beverage may become cheaper but computers, properties and gym memberships could cost more with a Goods andServices Tax (GST).

Analysts say this is the expected impact of the GST, which the government plansto introduce in 2011 as it seeks to widen its revenue source.

As it is, only a tenth of all workers pay income tax while earnings from oil make up about 40 per cent of federal government revenue.

The GST will replace the current sales and service taxes. At four per cent, it would be lower than the current sales and service taxes of five to 10 per cent, although essential goods like cooking oil would be exempt from GST.

PricewaterhouseCoopers senior executive director Wan Heng Choon said however,several other things would be more expensive, among them computers and houses.

“The rich will have to pay higher tax as they consume more. The lower incomegroup will benefit from the GST."

As for businesses, companies with revenues of less than RM500,000 would not have to pay GST. Wan said the GST, which taxes money spent, would have a neutral effect on businesses, but this would also depend on whether the companies understood how the tax worked.

He said the GST would hurt companies that did not put into place processes that would allow them to claim the input tax on time and monitor cash- flow.

"GST is a credible tax. People should give the tax a chance and not dismiss it for the wrong reasons. Companies should understand the tax and implement it properly so no one loses out."

Wan said businesses could benefit from the GST, provided they had good control over their taxes.

"If they don't do that, then the tax will become embedded and businesses will pass it on to consumers. If companies do not claim properly, it would be their loss."

The Real Estate and Housing Developers' Association Malaysia (Rehda) expects developers to pass on cost increases to buyers to maintain their profits.

Datuk Richard Fong, a developer, said houses would cost more from 2011, but he did not expect a severe effect on property transactions as the market was improving.

"Whether the GST will affect sales and how it will impact the industry, we have to wait and see until it is introduced," said Fong, who is Glomac Bhd group executive vice-chairman.

Deloitte Malaysia country tax leader Ronnie Lim said companies should take action soon to ensure they were GST- compliant.

"Businesses have to start upgrading their systems now."

"We advise businesses to start early as resources, especially the personnel and information technology, will be stretched when it comes to the crunch."

"Australia introduced GST in 2000. As demand within a limited period outstripped supply, GST experts from Britain, South Africa, Canada and New Zealand were brought in to augment the supply. Imagine the costs involved in the Malaysian context."

GST implementation requires two main services experts, for which there are not many in Malaysia.

"There are also not enough experts to modify the software to cater to the new tax regime."

Second Finance Minister Datuk Seri Ahmad Husni Mohammad Hanadzlah said the implementation of GST was a means of placing the country's economy at a level that was at par with those of developed nations and in keeping with changing times.

It gave the government an advantage, particularly in enhancing income flow, which could then be used to implement projects for the benefit of the people, he told Bernama in Ipoh yesterday.

"Only three Southeast Asian countries do not practise this taxation system, and they are Malaysia, Brunei and Myanmar."

"We will join 143 other countries in implementing the GST," he said after a gathering at the Tambun parliamentary constituency mobile service centre here yesterday.

Ahmad Husni said the people were becoming more rational now and those groups who wanted the government to postpone or review the implementation should have a strong reason for it.

Malaysia will cut up to 40pc carbon emission by 2020

COPENHAGEN: Malaysia will voluntarily slash by up to 40 per cent her carbon emission by 2020 compared with 2005 levels.

Prime Minister Datuk Seri Najib Razak, who made this commitment today, said this was part of Malaysia’s contribution to global efforts to combat climate change.

He said, however, the reduction was conditional upon the transfer of technology and adequate financing from developed and industrialised countries and economies.

Addressing the United Nations Climate Change Conference 2009 (COP15) here, Najib said Malaysia was committed to doing its best to combat climate change.

“We realise this is nothing short of a herculean endeavour, but Malaysia is committed,” he said, adding COP15 offered the best hope for a global framework of cooperation.

He said COP15 presented fair principles of equity and historical responsibility due to the need of parties in the Annex 1 category (industrialised countries and economies in transition) to repay their climate debt.

“The key to our future cooperation is to recognise, adopt and work out the realisation of the principle of fair shares to the atmospheric space and resource.

“At the same time, we must have ambitious environmental aspirations,” he said, adding that these two factors would ensure COP15’s success.

Najib later described the proposed US$10 billion (RM3.4 billion) fast track funding for developing nations to control emissions as a “mere pittance and woefully inadequate”.

He said developing countries required long-term financing of some US$800 billion a year for adaptation and mitigation of climate change.

The funding, he added, was linked to the target of limiting global warming to a 2°C temperature rise.

However, the figure could hit US$1.5 trillion annually based on scientific endeavours to cap the rise at 1.5°C.

“If we think about it, this is not too high when compared with the trillions of dollars recently used in bailing out banks and companies.” Najib urged developed countries to commit US$200 billion annually by 2012 until US$800 billion annually thereafter.

He also spoke on the looming threat of trade protection under the guise of addressing climate change.

For COP15 to work, there must be a clear statement that developed countries would not take trade-related measures such as carbon tariffs and border adjustment measures against the products, services and investments of developing countries.

“Otherwise, we would have an unacceptable situation where developed countries give one dollar with one hand and remove 10 dollars with the other.”

RM20 or lower electricity bills waived until Dec 2010

KUALA LUMPUR: The energy, green technology and water ministry will continue exempting payment of domestic electricity bills of less than RM20 until next December.

In a press statement today, minister Datuk Seri Peter Chin Fah Kui said the government had agreed to this move, in view of the recovering economic situation and concern for the low-income group.

He said, such exemption was given to domestic consumers based on the actual monthly claims, adding that an average of 1.05 million consumers enjoyed the exemption since the programme was introduced in October last year.

"Assuming each household consists of between two to five people, the privilege is enjoyed by more individuals," added Chin.

Meanwhile, he said the government had to bear an average of RM11.95 million in expenses each month to cover the electricity bill exemptions offered to consumers in the Peninsular, Sabah and Sarawak.

As of September this year, Chin said RM143.4 million was paid by the government since the exemption programme was introduced.

"The government is expected to cover an additional cost of RM143 million to continue the exemptions from January to December 2010," he said. - Bernama