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Showing posts with label Budget 2018. Show all posts
Showing posts with label Budget 2018. Show all posts

Saturday, August 11, 2018

Implications of the 'RM19bil GST collected, RM18bil taken’ and RM19.4bil shortfall !

https://youtu.be/Ew5Fk-ml6Mo 

The immediate concern is the budget deficit for 2018 spiking to 4% if the GST refunds are made this year


ON May 31, when Finance Minister Lim Guan Eng announced that the new government would be able to meet the budget deficit of 2.8% for this year, the sum of RM19.4bil that is to be refunded to companies since the goods and services tax (GST) was discontinued, never came into the equation.

Now, since that money is not in a trust account that was specifically set up to meet the refund obligations, does the government need to borrow more to ensure it meets the refunds? In doing so, would it incur a bigger budget deficit than had been envisaged?

There are wider implications on the shortfall of the RM19.4bil, assuming the refunds are to be done this year.

The biggest challenge for Lim is to cover the shortfall to maintain the budget deficit for 2018 at 2.8%.

The hallmark of the Pakatan Harapan government’s first 100 days of rule is to bring down the cost of living and cost of doing business. Towards this end, it has subsidised the price of petrol and diesel and removed the GST.

The cost of keeping up with the Bantuan Sara Hidup and subsidy for petrol and diesel is estimated to be about RM6.2bil between June and December.

Revenue loss due to discontinuing the GST from June 1 onwards is estimated at RM21bil.

The shortfall is made up of cutting down government expenditure by RM10bil, increasing dividends from government agencies such as Khazanah Nasional Bhd and Petroliam Nasional Bhd, a higher petroleum income tax of RM5.4bil and proceeds from the implementation of the sales and service tax from September onwards.

Nowhere was the RM19.4bil figure that is to be paid back to companies under the GST that was discontinued mentioned.

Lim has said that the money was supposed to be in the trust account, but is not there and has gone “missing”.

Former Finance Ministry secretary-general Tan Sri Mohd Irwan Siregar Abdullah has said that all proceeds from the GST went into the consolidated fund of the federal government. The amount to be refunded is allocated to the trust account monthly based on the requirements of the Customs Department and the financial position of the government.

Customs director-general Datuk Seri Subromaniam Tholasy has revealed that since the GST was implemented on April 1, 2015, the total refunds amounted to RM82.9bil and the amount allocated to the trust account from the federal government consolidated fund was only RM63.5bil – representing a shortfall of RM19.4bil.

Generally, refunds for the GST are to be done within 14 days. But the amount allocated is less because not all refunds are paid within the two-week period.

At times, refunds are held back up to one year, pending investigations. Hence, the cash allocated to the trust account maintained by the Customs and the Inland Revenue Board (IRB) is less than the total amount due for refunds.

For instance, in 2017, the amount allocated to the IRB trust account for refunds was RM7bil when the total amount to be refunded was more than that.

In the case of the Customs, the outstanding refunds for 2017 was RM15bil, but the amount allocated was less.

Under the previous government, the GST provided a steady flow of cash every month. The thinking was that the money for refunds should be allocated when it comes due to best manage the cash-flow position of the government.

However, the view of Lim is that money meant for refunds should have been put into the trust account, irrespective of whether there is a need to pay immediately or otherwise.

Hence, the issue is not really the question of the RM19.4bil meant for refunds going “missing”.

It is whether the money is still in the consolidated accounts or whether it has been utilised. If it was utilised, did the government have the right to use it for other purposes in the name of cash-flow management?

The bigger implication for the Pakatan government is how it is going to cover this RM19.4bil shortfall.

One of the ways the government can cover the RM19.4bil hole without increasing the deficit is to cut more of the excesses.

On this score, the Pakatan government has so far handled public funds in a more judicious manner compared to the previous government. It has cut down the budget for inflated infrastructure projects and stopped unnecessary spending.

The light rail transit 3 and East Coast Rail Link projects are only some examples. It has stopped prestigious projects such as the KL-Singapore high-speed rail and the less glamorous mass rapid transit line 3 project. The government of today has earned full marks for being transparent and diligent in handling public finances.

Despite declaring that the federal government debt is at RM1.07 trillion, business sentiment is at a seven-year high, while consumer sentiment is at a 21-year high.

The stock market is looking good so far, much better than the likes of China and Hong Kong, although the improved sentiments are likely to be temporary.

As for the ringgit against the US dollar, its performance is better against many of the Asian and emerging-market currencies. The tumbling of the Turksih lira and Russian rouble is testimony that the ringgit is not that bad after all.

The government can probe, produce a White Paper or do anything else to look into the RM19.4bil shortfall, but the bottom line is that Lim and Prime Minister Tun Dr Mahathir Mohamad will have to face the reality of making up for a RM19.4bil shortfall in government finances for this year.

Economists are predicting that the federal government budget deficit would be higher than the 2.8% estimated on May 31 this year on the assumptions are made this year. Some are looking at the budget deficit to be as high as 4%

Would there be an impact on Malaysia’s credit rating and the ringgit?

Yes, a spike in the budget deficit would have an impact for the short term.

However, the government of the day will score brownie points in its drive to bring about reforms and governance in the management of public funds. Rating agencies would appreciate any government that promotes transparency and improves on its finances purely by spending within its means.

So far, the government has done away with the GST and taken measures to put more cash into the hands of the people and business to improve domestic spending. The stabilisation of petrol prices and threemonth (June to September) tax-free period between the implementation of the GST and SST has put RM20bil into the hands of the people and businesses. This should help improve the domestic economy for a few months.

However, for the longer term, investors and rating agencies will be looking at how the RM19.4bil hole in the federal government finances will be covered. What are the government assets that will be sold?

Certainly, we are not looking at an expansionary budget come November this year.

Source:  The Alternative view by M.Sshanmugam The Star

RM19bil GST collected, RM18bil taken’




KUALA LUMPUR: The previous government has not been able to refund companies their tax credit that came about following the implementation of the Goods and Services Tax (GST) because 93% of the money was not placed in the correct account, Finance Minister Lim Guan Eng revealed.

He said some RM18bil of the RM19.4bil input tax credit under the GST system since 2015 was “robbed” by the previous administration.

“I was very shocked when informed that this happened because the previous government had failed to enter the GST collection in the trust account specifically meant for the repaying of GST claims.

“Instead, the Barisan Nasional government pilfered the trust account and entered cash GST collection directly into the consolidated fund as revenue to be spent freely,” he said when tabling the GST (Repeal) Bill 2018 during its second reading in Parliament yesterday.

He said that as of May 31, the outstanding GST refund stood at RM19.397bil whereas there was only a balance of RM1.486bil in the repayment fund.

Lim said from the total input tax credit, RM9.2bil or 47% was recorded between Jan 1 and May 31 this year, RM6.8bil or 35% in 2017, RM2.8bil (15%) in 2016, and RM600mil (3%) in 2015 (from April 1 to Dec 31, 2015).

Under GST, the input tax credit allowed businesses to reclaim credit for taxes paid on purchases, subject to filing of input tax documents.

In his winding-up reply, Lim said a comprehensive investigation would be carried out to determine the cause of the missing funds.

When debating the Bill, Lim also said he had asked for documents to show how the input tax had ended up in the consolidated fund.

“I asked the Chief Secretary to the Government for the Cabinet papers on the matter.

“However, he told me he could not remember anything of such,” he added.

Lim said former Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz, when told of the missing funds, said it was imperative that the money was returned to the claimants as it was fiscally moral to do so.

Later, at the Parliament lobby, Lim said a former Treasury secretary-general may have been aware of the missing RM18bil.

The previous government, he said, had committed wrongdoing over the missing funds.

“I would assume the previous KSP (ketua setiausaha perbendaharaan/Treasury secretary-general) would have known about this.

“We want something definite because we want to look at the circle of decision-makers,” he said.

By martin carvalho, hemananthani sivanandam, rahimy rahim, and loshana k shagar The Star

Khairy urges gov't to bring 'GST robbers' to book




BN MPs want Najib, RM18b GST 'robbery' claim investigated





Related 

GST refunds should be in trust account: ACCCIM - theSundaily

 

RM18b input tax credit under GST system robbed ... - The Straits Times

 

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Saturday, October 28, 2017

Malaysia's Budget 2018 Highlights

https://youtu.be/6kKoGiQazqg

https://youtu.be/XkhGpk-L94Y


KUALA LUMPUR: Prime Minister Najib Razak has tabled the RM280 billion Budget for 2018, his last before the next general election which must be called by middle of next year.

Below are Salient points of the budget from Dewan Rakyat.

Civil Servants

• 1.6 million civil servants to receive the following benefits:
– second round time-based promotions
– senior servants who retire due to health reasons will be accorded the same benefits as those who undergo mandatory retirement
– special leave for teachers increased to 10 days a year, up from seven
– seven days unrecorded leave for umrah pilgrimage
– women at least five months pregnant allowed to leave work an hour earlier while husbands accorded the same privilege if their work locations are in close proximity to each other
– maternity leave increased from 300 to 360 days throughout service with a maximum of 90 days a year
– RM1,000 set for minimum pension amount

Senior Citizens, Disabled, Children

• RM1.7 billion for the following areas:
– RM603 million to increase allowance of senior citizens from RM50 to RM350
– RM100 million to increase allowance for the disabled by RM50 a month

Digital Free Trade Zone

• RM83.5 million allocated for DFTZ in Aeropolis, KLIA.
• Increase minimum value for imports from RM500 – RM800.

Sustainable Development

• RM5 billion allocated under Green Technology Funding Scheme.
• RM1.4 billion to reduce non-revenue water programme.
• RM1.3 billion to build Off-River Storage as an alternative water source.
• RM517 million for flood mitigation plans nationwide.

Reduction in Income Tax Rates

• Reduction in individual income tax rates:
– RM20,001 – RM35,000: 5% to 3%
– RM35,001 – RM50,000: 10% to 8%
– RM50,001 – RM70,000: 16% to 14%
• Increase disposable income between RM300-RM1,000 while 261,000 do not have to pay tax

Foreign Domestic Helpers

• Allow employers to hire foreign domestic helpers directly without agent.

GST

• No change to Goods and Services Tax but government to propose either exemption or zerorising certain items and services.
– local councils
– reading materials
– cruise operators
– construction of schools and places of worship funded by approved donations
– oil and gas equipment imports under lease agreement
– import of big ticket items like planes and ships
– management and maintenance of homes with strata titles

Health

• RM27 billion for better quality health services.
• RM4.1 billion for medical supplies and consumables.
• RM1.4 billion to upgrade and maintain health facilities, equipment, ambulances and construction of operation theatres in three hospitals.
• RM100 million to upgrade hospitals and clinics.
• RM50 million to subsidise hemodialysis treatment; and RM40 million for medical assistance fund.
• RM10 million for treatment of rare diseases; RM30 million for health community programmes.
• RM50 million for voluntary health insurance scheme.

Housing

• RM2.2 billion allocated to boost home ownership.

BR1M

• 7 million benefited from RM6.8 billion in BR1M payouts and in 2018 the 7 million will continue to receive the same payout.

Orang Asli Benefits

• RM50 million for Orang Asli for economic development and quality of life enhancement.
• RM60 million for Orang Asli village development.

Indian and Chinese Benefits

• RM50 million for Chinese SME loans through KOJADI.
• RM30 million to be channelled to the 1Malaysia Hawkers and Petty Traders Foundation.
• RM65 million allocated for Chinese New Villages and RM10 million for house restoration.
• RM1.5 billion additional Amanah Saham units for Indians.
• Increase the intake of Indians to IPTA and public service (7%)

Bumiputera Benefits

• RM2.4 billion allocated to UiTM.
• RM3.5 billion for the following initiatives:
– RM2.5 billion for MARA higher education and training scholarships
– RM90 million for Program Peneraju Profesional, Skil dan Tunas
– RM200 million for MARA Graduate Employability Training Scheme or GETS
– RM555 million for Bumiputera Entrepreneurship Enhancement Programme (RM200 million for PUNB Entrepreneurship Programme and Business Premises; RM200 million for MARA Entrepreneurship; RM115 million for Vendor Capacity Programmes).
• RM150 million for Pelaburan Hartanah Berhad and RM150 million to EKUINAS.

Defence

• A total of RM14 billion for armed forces; RM9 billion for police force, RM900 million for Malaysian maritime.
• RM3 billion for purchase and maintenance of defence assets; RM720 million for the construction of 11 police headquarters and six police stations.
• RM490 million to MMEA for repair and maintenance of ships, boats, jetties and procurement of three patrol vessels.
• RM250 million to ESSCOM
• RM50 million to enhance weapon capability to combat terrorism.
• Government to build 40,000 houses in phases for families of armed forces personnel.
• RM40 million to upgrade five hospitals; build four polyclinics and one hospital for veteran armed forces personnel.

Rural Development

• RM200 million allocated for Felda for water supply and road upgrades.
• 112,ooo settlers will each receive windfall worth RM5,000.
• RM43 million allocation for Felda settlers and RM60 million for replanting of oil palm, RM164 million allocation to build 5,000 houses for second generation Felda settlers.
• RM1.1 billion for people-centric projects; RM1 billion to develop communication infrastructure; RM934 million for rural projects; RM672 million for electricity supply; RM420 million for clean water supply inclusive of RM300 million in Sabah and Sarawak covering 3,000 homes; RM500 million for public infrastructure maintenance; RM50 million for mapping and measuring of native customary land
– RM30 million for Sarawak, RM20 million for Sabah.
• RM6.5 billion for rural infrastructure which includes RM2 billion for the Pan Borneo Highway.

Education

• RM4.9 million allocated for 100 scholarships for TVET students.
• RM4.9 billion allocated for Technical and Vocational, Education and Training (TVET).
• RM200 million added to PTPTN fund for B40 families.
• Discount for repayment of PTPTN loans is extended to Dec 31, 2018 (20% for full repayment, 10% for 50% repayment, and 10% for direct debit salary deduction).
• RM100 for 3.2 million schoolchildren totalling RM328 million.
• RM2.9 billion for food aid, text books and minor federal scholarships.
• RM2.5 billion for maintenance of schools – RM500 million in Peninsula, RM1 billion in Sabah, RM1 billion in Sarawak, in addition to an existing special fund for maintenance.
• RM654 million for construction of four pre-schools; nine Permata schools; two centres for children with autism; 48 primary, secondary as well as vocational and matriculation centres.
• RM61.6 billion for development of education.

TN50

• RM20 million for Bukit Jalil sports school.
• RM112 million to construct 14 new sports complexes nationwide.
• RM1 billion to conduct sports initiatives to make country a sports powerhouse.
• RM50 million to fund social enterprise and NGOs to solve communities issues.
• RM40 million for open interview programme under the 1Malaysia training scheme (SL1M).
• All undergraduates and those in Form Six will continue to receive book vouchers.
• RM90 million for MyBrain programme for 10,600 students to further their studies at post-graduate level.
• RM400 million for research and development grants to public institutions of higher learning with a special allocation to Universiti Malaya to achieve status of Top 100 universities in the world.
• RM2.2 billion for JPA scholarships, the ministry of higher education and ministry of health.
• RM20 million for setting up of a Cultural Economy Development agency.
• RM190 million to upgrade 2,000 classes to become smart learning classrooms.
• To enhance present computer science module to include coding programme in primary and secondary school curriculums.
• RM250 million to build science, technology, engineering and mathematics centre.
• Special fund set up for children born between Jan 2018 to Jan 2022.
• Tax relief for employers who employ the disabled that include those involved in accidents and have critical illnesses.
• Local councils to make it mandatory for all new buildings to have childcare facilities, beginning in Kuala Lumpur.

Public Transport

• Government studying proposal for a new airport in Pulau Tioman.
• Government to build new airport for Mukah and expand airport for Kota Bahru and Sandakan.
• Government to upgrade Penang and Langkawi international airports.
• RM55 million transport subsidy for rural rail services from Tumpat to Gua Musang.
• RM45 million to create a biometric control system to monitor the movement of express bus services.
• RM95 million for the repair and construction of jetties as well as river mouth dredging.
• RM1 billion for public transport fund for start-up capital and procurement of assets like buses and taxis.
• RM3 billion for transport development fund for the purchase of maritime assets, aerospace technology development and rail.

Infrastructure

• Special border economic zone in Bukit Kayu Hitam to be developed.
• Pulau Pangkor to be declared a duty-free zone.
• RM230 million to continue central spine road project from Raub to Bentong.
• RM5 billion for the west coast coastal highway from Banting to Taiping.
• Government to expedite MRT3 project by two years from 2027 to 2025.
• RM32 billion for MRT2 project (Sg Buloh-Serdang-Putrajaya).
• RM110 million to provide alternative road to Port Klang.

Tourism

• RM30 million to be allocated to the Malaysian Healthcare Travel Council to boost medical tourism.
• RM500 million for the promotion and development of tourism.
• RM1 billion to tourism infrastructure development fund.
• RM2 billion fund for SMEs in tourism.

Agriculture

• RM200 monthly for a duration of 3 months for padi farmers while waiting to harvest their crops, which amounts to RM150 million.
• RM200 million for rubber replanting, RM140 million for development, re-planting and promotion of oil palm.
• Almost RM500 million to improve agriculture infrastructure.
• RM2.3 billion in incentives and assistance for the agriculture community.
• RM6.5 billion allocated to the smallholders, farming and fishing communities.

Other Highlights

• RM100 million with a 70% government-guaranteed loan for the furniture export industry.
• RM200 million allocated for training programmes, grants and SME easy loans under SME Corp; and close to RM82 million for halal products and industry development.

• RM2 billion set aside for 70% government-guaranteed loans.
• RM5 billion allocated for start-up capital for businesses.
• RM7 billion allocated to Skim Jaminan Pembiayaan Perniagaan.
• SMEs expected to contribute 41% of GDP by 2020.
• Private sector investment is expected to reach RM260 billion by 2018 and will be the engine of growth.
• Total investments in the country is expected to increase by 6.7% contributing to 25.5% to the GDP for 2018.
• RM26.34 billion for economic sector; RM11.72 billion for the social sector; RM5.22 billion for the security sector; RM2.72 billion for general administration sector.
• Administration budget is RM119.82 billion; other expenditure is RM1.08 billion; asset procurement is RM577 million.
• For 2018, federal government is expected to collect RM239.86 billion in revenue.
• Allocation for Budget 2018 is RM280.25 billion, an increase of over RM20 billion.
• B40 household income has increased to RM3,000 per month from RM2,629 for the period 2014-2016.
• Monthly median income has increased from RM4,585 in 2014 to RM5,288 in 2016.
• Current per capita income stands at RM40,713, expected to reach RM42,777 by 2018.
• Our international reserves now stand at US$101.4 billion.
• In August, exports hit a high of RM80 billion, recording double-digit growth.
• 69% or 2.26 million new jobs created so far from the target 3.3 million to be created by 2020.
• 3 international credit rating agencies have reaffirmed our A-rating with stable prospects.
• Looking at 2009, our fiscal deficit was at 6.7% of the GDP and is expected to decrease to 3% in 2017 and 2.8% in 2018.
• Actual private investment for 2016 is over RM211 billion.
• Government projection growth of between 5.2% to 5.7% for 2017, higher than the projection in March of between 4.3% and 4.8%.
• Projected GDP increase from 4.9% to 5.2% for 2017.
• The country has had a growth rate of 5.7% in the first half of 2017.

Source: Free Malaysia Today

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