GST targets a bigger group but poor hit most, say economists

Putrajaya’s decision to finally introduce the Goods and Services Tax (GST) is a regressive move that would largely hurt poor and debt-ridden Malaysians, say economists.

While they lauded the government's move to abolish the Sales and Services Tax (SST) for the GST, the economists argued that the consumption tax of 6% effective April 1, 2015 would in fact do more harm than good in the long run.

“This is a regressive tax where the poor would be taxed more than the rich,” said Lim Mah Hui, from the Socio-economic and Environment Research Institute (SERI).

The lower income group would have to fork out a bigger chunk of their wages in terms of percentage compared with the rich, forcing the poor to pay a bigger percentage margin to the government in the form of the GST, he told The Malaysian Insider.

But Prime Minister Datuk Seri Najib Razak said during his Budget 2014 speech yesterday the GST would be a “fair and comprehensive tax system that would benefit all Malaysians”.

"More than 160 countries have already implemented the GST. This clearly demonstrates that GST is proven to be a transparent, effective and fair tax system,” said Najib, who is also the Finance Minister.

"The vast majority of nations in the world would not have implemented GST if it is disadvantageous to the people and the country," he added.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said after Najib's budget speech that the lower income group would not be burdened.

"The effect to this group is neutral," he told a press conference in Parliament.

Economists said that a low income household earning roughly RM1,800 a month would have to spend more of their pay for necessities, a fact which Bank Negara noted in its Outlook and Policy 2013 report on the BR1M.

The report mentioned that based on analysis, “lower income households are more sensitive to income shocks” and that the poor “tend to have lower savings as most of their expenditures are for necessities”.

By pushing forward with the GST, the government would reinforce investor confidence but burden the people in the long run.

“With a definite GST rate, the market would receive it positively,” said Edward Lee, regional chief economist at Standard Chartered.

Influential former prime minister Tun Dr Mahathir Mohamad had said earlier this year that the GST should be implemented in stages.

“Everything should be done in stages, slowly, not the full amount at the same time, for the benefit of the people," he said during the Perdana Leadership Foundation CEO Forum in June.

Institut Rakyat economist Azrul Azwar Ahmad Tajudin said Putrajaya deserved credit for abolishing the SST instead of running the taxes in parallel but added that the government needed to ensure that it can enforce the GST effectively.

“I'm not certain if the committee tasked to oversee the implementation of GST would have the teeth to enforce the GST on traders, manufacturers so as to curb inflation,” Azrul said.

“In the past, the trend with enforcement has been lacking in Malaysia. It makes you think if enforcement would be better now than it is in the past.”

The GST would require an input and output of tax to be enforced at every level of the supply chain, a tedious and complex task which pundits have said may not work in Malaysia.

But more importantly, the brunt of the tax will be spread out to the consumers, a harsh reality that many Malaysians would not appreciate, they added.

“While this is an efficient tax, we must remember that 80% of Malaysian households are in debt,” Lim from SERI cautioned.

According to financial analyst Jesse Colombo, a columnist at Forbes magazine, Malaysia’s ratio of household debt to GDP hit a record of 83% – the highest household debt load in Southeast Asia.

With the GST, Lim believed that Malaysians would continue to spend more than they earn – a prediction that does not bode well for a country that has 41% of its population between the ages of 25 to 54.

The economists’ warning brushes off the government’s insistence that the GST would reduce the tax burden on the people, especially the low income group, through tax exemptions.

“What's the need to give the BR1M RM300 one-off payment if the government insists that there won't be an inflationary impact?

"If you don't foresee any burden on the low income group then why give the one-off cash assistance?” asked Azwar, referring to the one-off payment the government would pay to the poor when the GST takes effect. – October 26, 2013.

Contact Bifrost Tech today to understand how we can help to get your business ready for Malaysia GST Tax. Email us : support@bifrostech.com or call us at 046384789 or visit us at http://www.bifrostech.com

Malaysia GST - Is your software ready?

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On 2015, we will officially move to the GST tax system in Malaysia.

Unfortunately, making the move to the GST tax system won’t be a snap for small businesses and a bit of paperwork will be required.

To help make the transition a little easier for businesses, here are some things that they need to know,

What GST is and how it is different from the existing sales tax and service tax.

1. Single versus multiple stage

Unlike the existing sales tax and service tax, GST is generally charged on the consumption of goods and services at every stage of the supply chain, with the tax burden ultimately borne by the end consumer. This multiple tax levels feature of GST is the fundamental change from the present single-stage sales tax and service tax levied at only one stage of the supply chain.


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2. Goods and services subject to tax

GST operates on a negative concept - all goods and services are subject to GST unless specifically exempted. For sales tax, the same concept applies where all goods are taxable unless specifically exempted. It is anticipated that the number of exemptions under the present sales tax regime would be significantly reduced.

Service tax, on the other hand, operates on a positive concept where only services that are specifically prescribed are taxable. Under a GST regime, the opposite will apply and a much wider range of services will fall within the GST net than before. The potential of a wider tax base under a GST regime is attractive to governments, as it offers greater flexibility as a revenue measure and promises simplicity compared to the task of administering exemptions and identifying taxable services under the current sales tax and service tax respectively.

3. Tax payment and accounting periods

Time of supply is an important feature under the GST regime as it determines when one should account for GST in the GST returns. The approach used by many countries when adopting GST is that a supply is considered to have taken place at the earliest of the following three events:  the time an invoice is issued; or  the time any payment is received by the supplier; or the time a taxable supply is made.


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The tax payment by GST registrants is worked out by deducting GST credits (input tax) from GST due (output tax) in the GST return. The GST rules differ from the existing sales tax structure where sales tax becomes due and payable when there is a sale or disposal otherwise than by sale. On the other hand, service tax is only due when payment is received, and where payment is not received, the tax is accounted for at the end of the 12-month period from the date of invoice issued. The GST concept of time of supply is therefore generally wider than the provisions in the existing sales tax and service tax and it will be important for businesses to learn to cope with the change, as there will potentially be changes to the enterprise’s cash flows under the new tax.

Bifrost partner with few accounting and audit firms such as TehEngAun & Co, Lim, Tay & Co, and Khoo Khai Hong & Co to provide professional support for business in Malaysia. Engage Bifrost today to understand how we can help to get your business ready for Malaysia GST Tax. 

Email us support@bifrostech.com or call us at 046459769 or visit us at http://www.bifostech.com/Accounting.aspx

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1. Game Creation with XNA - Wikibooks, 2012

This book is a collection of tutorials on game creation with Microsoft's XNA framework. Contents: Basics; Game Design; Mathematics and Physics; Programming; Audio and Sound; 2D/3D Game Development; Networking and Multiplayer; AI; Kinect; etc.

2. The Python Game Book by Horst Jens et al. - thepythongamebook.com, 2012

The Python Game Book written by Horst Jens and friends aims to provide interested students and teachers a broad range of material to teach themselves how to write computer games using the language Python and other free Open Source tools.

3  Making Games with Python and Pygame by Al Sweigart, 2012

This is a programming book that covers the Pygame game library for the Python programming language. Each chapter gives you the complete source code for a new game and teaches the important programming concepts from these examples.

4. Introduction to Programming Through Game Development Using Microsoft XNA Game Studio by Rob Miles - Microsoft Press, 2009

Learn the underlying skills and principles of software development as you design and build your first games for Xbox 360, Windows, and Zune. This curriculum teaches the fundamentals of C# programming and the XNA Game Studio framework.

5. Programming Vertex, Geometry, and Pixel Shaders by Wolfgang Engel, et al., 2011

This reference covers the advanced rendering techniques important for graphics programmers in the game and film industries, and will help them implement these techniques with DirectX 10. Intended for people with background in DirectX8 or DirectX9.

6. BlitzMax - Wikibooks, 2010

BlitzMax is a computer programming language based on BASIC. The code is first converted to a low level assembler format which is then assembled into object code for the target platform. BlitzMax is capable of compiling for Windows, Linux and Mac OS.

7. Creating a Simple 3D Game with XNA - Wikibooks, 2010

This tutorial is designed to provide a guide to using XNA to help create games in as simple and a visual way as possible. Examples of all of the basic elements to get started on a simple game are included, including controls, sound, and gameplay.

8. Beginning C++ Through Game Programming by Michael Dawson - Course Technology PTR, 2010

If you're ready to jump into the world of programming for games, Beginning C++ Through Game Programming will get you started on your journey, providing you with a solid foundation in the game programming language of the professionals.

9. Pro Java 6 3D Game Development by Andrew Davison - Apress, 2007

Pro Java 6 3D Game Development explains how to program 3D games in Java on a PC, with an emphasis on the construction of 3D landscapes. The author assumes you have a reasonable knowledge of Java, the sort of thing picked up in a first Java course.

10. Blender 3D: Noob to Pro - Wikibooks, 2010

This book is a series of tutorials to help new users learn Blender. The tutorials increase in difficulty, and later tutorials build on the lessons in previous ones. Therefore, Blender beginners should follow the tutorials in sequence.

11. Blender Basics: Classroom Tutorial Book by James Chronister, 2009

Blender is a 3D technology rendering/animation/game development open-sourced freeware program maintained by the Blender Foundation. This tutorial book is designed to get you up and running in the basics of creating objects and scenes and animating.

12. Strategy Game Programming by Martin Fierz, 2005

These pages intend to give a comprehensive overview of the elements of a computer program which can play two-player strategy games like tic-tac-toe, connect four, checkers and chess. Code fragments in this text are written in C.

13. The Linux Gamers' HOWTO by Peter Jay Salzman, Frederic Delanoy, 2004

This is a stepping stone to to give people the knowledge to begin thinking about what is going on with their games. You need to know a little more about what's going on behind the scenes with your system to be able to keep your games healthy.

14. Killer Game Programming in Java by Andrew Davison - O'Reilly Media, 2009

This book is for people who already know the basics of Java. It teaches reusable techniques which can be pieced together to make lots of games. For example, how to make a particle system, first-person keyboard controls, a terrain follower, etc.

15. The Java Game Development Tutorial by Fabian Birzele - Java Cooperation, 2004

A very detailed introduction into the development of online games using Java. The text will lead you from the basic structure of an applet to the development of a whole game. Topics covered: AI, level editors, random generation of landscapes, etc.

16. Action Arcade Adventure Set by Diana Gruber - Coriolis Group Books, 1994

The art and science of creating side scroller games is documented quite thoroughly in this book. If you can look past some obvious anachronisms, you will find that this old book still contains a lot of useful information.

17. So you want to be a Computer Game Developer? by Diana Gruber - Fastgraph, 2000

If you have the brains, the talent, and the courage to take risks, a career in Computer Game Development may be right for you. The job security and the creative satisfaction can all be yours, but only if you have what it takes to do the job.

18. Learning to Draw Basic Graphics in C++ by Michael Morrison - InformIT, 2004

Learn how to use C++ code to create basic animated graphics in this chapter from Beginning Game Programming by Michael Morrison. Practical lesson based on C++ programming, the basics of drawing graphics using the Windows Graphics Device Interface.

19. Adventure in Prolog by Dennis Merritt - Springer, 1990

This book takes a pragmatic, rather than theoretical, approach to the language and is designed for programmers interested in adding this powerful language to their bag of tools. Much of the book is built around the writing of a short adventure game.

20. GPU Gems 3 by Hubert Nguyen - Addison-Wesley Professional, 2007

This volume provides a snapshot of the latest GPU (Graphics Processing Unit) programming techniques. Readers will find that the latest algorithms create ultra-realistic characters, better lighting, and post-rendering compositing effects.

21. Pangea Software's Ultimate Game Programming Guide for Mac OS X by Brian Greenstone - Pangea Software, Inc, 2004

Programming secrets for aspiring Mac game programmers. The book covers OpenGL, HID Manager, OpenAL, Rendezvous, Core Graphics, Quicktime, Maya plug-ins, stereo 3D rendering, AltiVec optimizations, networking, copy-protection, marketing strategies, etc.

22. The Java Game Programming Tutorial by Garry Morse, 1997

This tutorial starts with basic issues in the Java language with regard to applets, particularly for beginners or knowledgeable programmers who wish to make online Java presentations or games. The tutorial applets are available for downloading.

23. Creating Adventure Games On Your Computer by Tim Hartnell - Ballantine Books, 1984

Though dated, Hartnell's book is a good introduction to adventure game construction. While the book focuses on BASIC programming, which wouldn't be a programmer's choice today, it offers sound design techniques for the absolute beginner.

24. Michael Abrash's Graphics Programming Black Book by Michael Abrash - Coriolis Group Books, 2001

A book for game developers and serious assembly language programmers. It explores the technology behind the popular Doom and Quake 3-D games, and explains optimized solutions to 3-D graphics problems from texture mapping, hidden surface removal, etc.

25. The Art of Computer Game Design by Chris Crawford - Osborne/McGraw-Hill, 1997

One of the pioneer works seriously about video game. It explains what is a game, why people play games, and how to design a game. The author describes in detail what goes into the game design including many examples from his own experience.

26. Simulating Humans: Computer Graphics Animation and Control by N. I. Badler, C. B. Phillips, B. L. Webber - Oxford University Press, USA, 1993

This volume presents the problem of providing a surrogate or synthetic human for designers and engineers. The book is intended for engineers interested in understanding how a computer surrogate human can augment their analyses of designed environments.

27. Programming Linux Games by John R. Hall - No Starch Press, 2001

A complete guide to developing 2D Linux games, written by the Linux experts. It teaches the basics of Linux game programming and discusses important multimedia toolkits. You will learn to write and distribute Linux games.

28. Invent Your Own Computer Games with Python by Albert Sweigart - Albert\Sweigart, 2008

A programming book for kids interested in learning to program their own computer games with python, a serious computer language which is used by professional programmers also. The book explains programming principles from the source code examples.

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