Article Review 1
Title : Construction Costs and Housing Prices: Impact of Goods and Services Tax
Authors : Rozlin Zainal, Teoh Chai Teng, Sulzakimin Mohamed
Year : 2016
Malaysian has been introduced with Goods and Services Tax (GST) also known as Value Added Tax (VAT) since Budget 2005. On 1st April 2015, this six percent tax of GST has been implement officially. The issues that drawn from this article is that GST give impacts on properties and price. According to Isabelle (2014), the housing price will fall as the construction cost components that are use for land acquisition is subjected to exempt tax. While Williams Talhar and Wong disagree about that statement (Hisyam, 2015). They agree that the implementation of GST in Malaysia help government to generate more on construction cost. To add on, Rusnani (2014) stated that the price of housing input will boost up according to introduction of GST as exempt taxes to disallow developer to claim of input credits.
I agree on the authors of this article stated that because of implementation of GST in Malaysia, construction cost and housing price are relatively in positive relationship with GST. All building materials set at highest cost after GST implementation although the supply of land for housing properties is exempt from GST. Not only that, marketing costs also affected by the implementation of GST. That is why, developers change their way by outsourcing marketing agents to help them generate more on sales of property.
Moreover, the housing price also increasing no doubt will affecting the end buyer. They have to pay more to buy a house to the developers or property agent. This is because the developers or property agents need to achieve their own profit target. GST indirectly help these people to gain more in terms of cash flow where they tend to increase the output price and let the end buyer to bear the price increment. Secondly, work overload where the complexity of claiming procedure is engage and confusion.
There are several ways to help end buyer not to bear all the cost by themselves. First, the developers should have give such promotions or discounts between five percent to ten percent for those who would pay their installments in a single payment. This is will boost up the developer’s sales but at the same time they need to bear some losses too. Next, establish a GST specialist to overview this related issues so that it would not discriminate between both parties. Malaysia’s government do give subsidies to developers to build more house in certain place. Thus, the developers should be able to build more houses with cheaper price and at the same time their sales rate will increase drastically. Lastly, the federal government should play their role by improving themselves and continue collaborating with developers so that the stakeholders can get their benefit from this tax introduction.
In conclusion, the introduction of GST give impact on cost the price of building materials and land acquisition. Developers take advantage on exempted taxes by increasing the housing price that will eventually affecting the end buyer. Thus, government should work together to handle such scenario so that both parties are equally win.
Article Review 2
Title : Impact of Government Service Tax (GST) on Malaysian Takaful Industry : Issue and Challenges
Authors : Marhanum Che Mohd Salleh, Sheila Ainon Yussof, Nurdiana Irwani Abdulla
Year : 2018
This article is all about how GST give impacts on Malaysian Takaful Industry as Malaysia is the leader in Takaful industry within ASEAN region that contributed more than 70 per cent of gross Takaful contribution. Two related issues of Takaful related to GST are the permitted status of taxation and the allowed of imposing tax to the Participants Risk Fund (PRF).
According to Mufti Sheikh Ahmad Kutty (2016), payment of tax can never absolve a Muslim of his or her duty to pay the zakah (zakat), which is a divine mandate, while tax is a human obligation towards government. I have to agree with this statement where Muslims are indeed need to fulfill the obligation to give zakah as an act of worship. Whereas, a Muslim is also need to pay taxes for the sake of society and get more benefits and services that are provided by the government. Moreover, PAS-led Terengganu government would like to impose an additional tax known as kharraj to non-Muslims where they have to pay certain amount of cash on their economic activities (Ng Boon Hooi, 2001). However, if some of non-Muslims are willingly to pay some cash upon to give charity to people who are in needs when getting an Takaful insurance is acceptable.
Next, the allowed of imposing tax to the Participants Risk Fund (PRF). Those takaful riders like critical illness, medical and accidents are consider as basic needs shall exempt by the tax. The implementation of GST on Takaful operations should be confined to the Takaful solutionsfor corporate business purposes only. This tax shall not give impact to PIF (savings) and PRF (risk fund) directly or indirectly. This taxation shall remain on wakalah fee, family product and fund management fee. But, if GST slowly show that it hurt businesses in the future then it shall be lifted immediately.
Introducing GST into Takaful industry give huge challenges since then. Firstly, the acceptance levels among public are low because they are afraid of the increasing in price on basic needs including the Takaful. Second, the authorities had difficult to issue guidelines to specific industry because of the differentiate between the practical of Takaful which likely to be like Islamic insurance compared to conventional insurance. Lastly, IT system that give high costs after implementing the tax.
As a conclusion, implementing the GST on Takaful industry does give impacts and challenges into the businesses. The authorities shall make a proper meeting between the federal and the Islamic scholar to discuss and come into new strategies to lifted the tax on Takaful industry after the GST had been implemented.
Article Review 3
Title : The Implementation of Goods and Services Tax (GST) and Changes in Spending Behavior among Malaysian Consumers
Authors : Shafie Mohamed Zabri, Kamilah Ahmad, Tham Gen He
Year : 2016
This article tells about the level of understanding of GST and its relationship with spending behavior among Malaysian consumers. Malaysian government gain revenues from this fair tax system and eventually by implementing GST into our economy, it will helps boost up the efficiency of tax system and increase collection of tax.
According to Abdullah, Idrus & Mehat (2013), more than half of 300 respondents are not understand clearly about GST after been introduced officially. To add on, findings from a survey that has been conducted by Shamsuddin (2014) showed that there is low level of awareness about GST. Most Malaysians are still confuse about the implementation of GST and they are not 100 per cent confidence on government about it. According to Palil & Ibrahim, (2012), consumers are worrying of significant price increases when the GST has fully implemented that will fully become burden for middle and low income earners.
I have to agree on this article where Malaysian consumers really change their mindset on their spending behavior because of the implementation of GST. For some people who have higher income earners may not feel the same burden like middle and low income earners. According to statistics, there is 51.3 per cent of the 300 respondents did not change their consumption behavior although the price of goods and services are increase due to the tax. Thus, Malaysian consumers are likely choose to savings instead of spending their money because of what happen.
Therefore, the level consumers’ understanding of GST and its relationship with consumers’ spending behavior are huge concern for everyone including the government. GST has fully implemented as a consumption tax, it adding on to consumers’ cost of living.
In a nutshell, Malaysian consumers are not completely understand what is GST tax is all about only at earlier stage when this new tax was fully implemented. Respondents from this study are all agreed on reducing their spending after the implementation of GST. This is because it shows a negative relationship between the understanding of GST and the consumers’ spending behavior. When the tax is been introduced at 6 per cent, all price of goods and services are increasing and the end buyer which are the consumers need to pay more to get a product. Therefore, most of Malaysian consumers chose to save their money instead of spending it.
Article Review 4
Title : Positive and Negative Impact of GST on Indian Economy
Authors : Mr. A. Dash
Year : 2017
This article tells us about how GST gives positive and negative impacts to Indian economy. For instance, the author briefly discuss about the benefits of GST after it fully implement where generally by doing so, it will eventually boost up the export and manufacturing activities, increase the Growth Domestic Product (GDP) together gain employment rate to substantive economic growth.
Within Indian economy, GST does give positive impacts to the consumers. According to Madhu Bala (2018) stated that implementing GST will eliminates cascading effect and barrier free tax structure. By introducing GST, it give impacts on production and distribution cost of goods and services. Reducing in cost of goods and services will lead to boost up the country’s GDP growth. While, GST without tax barriers will increase the economies of scale in manufacturing industry and reduces the supply chain cost. To add on, Jaspreet Kaur (2016) mentioned that by implementing GST into Indian economy will make the price of electronic goods cheaper.
Opposite to these, GST also give some negative impacts to Indian economy. India has implied dual GST instead of the national GST. By implemented GST at India give the entire structure complicated in different ways. The price of goods and services can easily decreasing but the service industries need to bear with the higher taxes. Those air travel and hotels prices will be expensive. In further situation, GST implementation will make the flight tickets increase to 18 percent and this make consumer pays more than usual price. Madhu Bala (2018) stated that GST give negative impact on the real estate industry and working capital. This show when GST is fully implement in Indian economy, the price of real estate will be increasing but the demand is decreasing. This is all because of the high tax given onto the real estate industry. Not only that, for working capital shows that a bigger companies with good capital can survive their businesses even though with the tax while small and medium enterprises may lead will bankruptcy.
In conclusion, the implementation of GST in Indian economy does give both positive and negatives impacts in different areas. The government need to overview this issues again as GST helps to boost up Indian economy but burden their consumers.
Article Review 5
Title : Why the GST failed
Authors : Dr. Suresh P.P. Narayanan
Year : August 12, 2018
The latest news tells us about that how GST gives a lot of impacts to different sectors in Malaysia. First, GST is a major liability to government. Although GST give lots of positive effect to Malaysian economy still, it give problems when the interest rate also increase make the revenues decreasing simultaneously. According to The Star Online (2017), GST is not the issue but how efficiently the money is spent is the main problem where corruption in public finance handling the money make the economy is not financially viable. Next, GST is a complicated tax to administer where we are still struggling on handling the GST to cash-strapped government.
Adding on, businesses do not bear the burden of GST but end buyer is. GST give impacts to business where it increase the price of goods but the demands from consumers are sloped. This will affecting their sales and revenues. Lastly, burden the consumers (tax payer). By implementing the tax will lower down the purchasing power of consumers. They will eventually choose to save money instead of spending it. Based on HR News in Asia (2015), the broader tax complained that they are concern about the higher goods prices and higher cost of living make their life miserable.
Few strategies should be done by the government which are ensuring that GST was revenue neutral when it is introduced on first hand. Next, the timing is important when economy is not facing with inflation from other industries or globally. Lastly, introduce auxiliary measure to check on general prices do not increase immediately after GST is fully implement.
I am fully agree about this news when the end buyer needs to pay more to get their own goods and services. Those middle and lower income earners are facing with problems when this tax been introduced since then while the high income earners are still enjoying their life without worrying the tax.
In a nutshell, introducing the tax in Malaysia is totally failed because the government really did not do their jobs to give information about it to consumers in Malaysia. Consumers still face with problems although there is BRIM which is 1Malaysia People’s Aid that helps those who are needs this. Their purchasing power still stuck because of the rising price of goods. The government should make new strategies not just to help the economy but also the consumers.
Article Review 6
Title : The Impact of GST on Small and Medium-Sized Enterprise Owners in the Malaysian Retail Sector
Authors : Yong Mun Ching, Jeyapalan Kasipillai and Ashutosh Sarker
Year : March 13, 2018
This articles tells about how business owners of small and medium enterprise are slowly stands back because of the implementation of GST. According to Yong Mun Ching (2018), the business owners are changing their preference about GST based on their attitude and perceptions, GST readiness and compliance costs.
As concluded in the article stated that these business owners are received MYR1000 to learn about the infrastructure of GST implementation and there are some workshops, training and seminars offered by Customs Department of Malaysia. They also face with mental illness together financial problem where when this tax are fully implemented, the increasing of costs in Malaysia and the deficit of Malaysian Ringgit (MYR) are their main concerns. Lastly, these business owners has loss money in other to pay other compliance cost where it is fixed. This lead them unhappy because they did not receive any return from it.
While according Amin Iskandar (2017), most of these business owners who are Malay willingly to pay their taxes but they are afraid of the high penalties that they may or may not get. Thus, most Malay entrepreneurs are slowly closing down their business. Adding on, in upcoming Budget 2018 the Parliament will discussing on ease their burden by restructuring the tax revenue penalty that all entrepreneurs are facing with.
In my opinion, I think that Malaysian culture are overly exposed to hanging with the government helps to stay on the same track. Conducting business in this era really need strong will and good strategies to stay and expand their business. But when there is problem, we did not try so hard to find other solutions. Truly speaking, that most Malay entrepreneurs are too alliance on others mostly the government.
Abdullah, H., Idrus, A. A. M. & Mehat, N. (2013). Kefahaman dan Kesediaan Pengguna Terhadap Pelaksanaan Cukai Barang dan Perkhidmatan (GST): Satu Tinjauan Awal. Prosiding PERKEM VIII, Jilid 2 (2013) 688-702 ISSN: 2231-962X Persidangan Kebangsaan Ekonomi Malaysia Ke VIII (PERKEM VIII) “Dasar Awam Dalam Era Transformasi Ekonomi: Cabaran dan Halatuju” Johor Bahru, 7-9 Jun 2013.
Amin Iskandar (October 20, 2017). GST has caused many Malay businesses to close shop, says chamber. Retrieved from HYPERLINK "https://www.themalaysianinsight.com/s/19360." https://www.themalaysianinsight.com.
Hisyam, K. (2015), GST Impact on pProperty Less than 5%, Says WTW. Available from: http://www.m.kinibiz.com/tag/malaysiaproperty.
HR News in Asia, (June 30, 2015). Majority of Malaysian workforce can’t cope with GST, survey finds.
Isabelle, L. (2014), Customs Department: GST to Have Minimal Impact on Home Prices. Available from: HYPERLINK ;http://www.thestar.com.my/Business/Business-News/2014/10/07/Minimal-impac; http://www.thestar.com.my.
Jaspreet Kaur, (2016). “Goods and service tax (GST) and its impact”. International Journal of Applied Research 2(8): pp.385-387.
Madhu Bala (February, 2018). GST in India and its Impact on Indian Economy.
Ng Boon Hooi (2001), Non-Muslim tax not compulsory, says Islamic scholar. Available from: HYPERLINK ;https://www.malaysiakini.com/news/1470; https://www.malaysiakini.com/news/1470.
Palil, M. R., ; Ibrahim, M. A. (2012). The Impact of Goods and Service Tax (GST) on Middle Income Earners in Malaysia. World Review of Business Research, 1(3), 192-196.
Rusnani, A.R., Aslinda, M.N., Puteri, E.H. (2014), Impact of GST Treatment on the Property Development Industry: REHDA Bulletin, 4. Available from: HYPERLINK ;http://www.rehda.com/wp-content/uploads/2014/06/REHDA-Bulletin-April-2014.; http://www.rehda.com/wp-content/uploads/2014/06/REHDA-Bulletin-April-2014.pdf.
Shamsuddin, A., Ruslan, M. I. M., Halim, A. A., Zahari, N. F. ; Fazi, N. F. M. (2014). Educators’ Awareness and Acceptance towards Goods and Services Tax (GST) Implementation in Malaysia: A Study in Bandar Muadzam Shah, Pahang. International Journal of Business, Economics and Law, Vol.4, Issue 1 (June)
Sheikh Ahmad Kutty (2018), Taxes and Zakah: Any Difference? Available from: HYPERLINK "http://aboutislam.net/counseling/ask-the-scholar/financial-issues/taxes-and-zakah-" http://aboutislam.net/counseling/ask-the-scholar/financial-issues/taxes-and-zakah-any-difference/.
Suresh Narayanan (May 27, 2014). The Impact of the Goods and Services Tax (GST) in Malaysian: Lessons From Experiences Elsewhere (A Note). The Singapore Economic Review, Vol 59, No 2 (2014) 1450009 (15 pages).
The Star Online (October 21, 2017). GST is not the issue. Business News.