Contrary to what the title might have suggested, I am not about to dive into a political rant. Instead, I am going to rant about something which you are directly and definitely part of – the consuming citizen.

Okie, the law might says that only citizens above the age of 21 is eligible to cast their votes during the General Election.

In Malaysia, a person is entitled to register if he :
i) is a Malaysian Citizen;
ii) is not less than 21 years of age on the qualifying date;
iii) is resident in any election constituency in Malaysia; and
iv) is not disqualified.

Source: Election Commission of Malaysia

Yes, there are many other requirements that you must fulfill in order to be able to cast your support for the political party that would most likely champion your principles, although in reality, it’s actually quite difficult to find any political candidates that has similar views as our own. However, in this short article, I am not going to talk about your political rights. This article would be about the rights you have as a taxpayer in this country.

Taxes You Pay

Before I explain what I mean by Voting Citizens, I would like to highlight another issue that concerns every Homo sapiens that walk on this beautiful land of Malaysia – taxes. Yes, you might be right that only people who are earning income pay taxes. But that’s only half correct. There are many other indirect taxes that we pay, aside from the income tax you file last minute every 30th April and 30th June. The common direct taxes that we pay are as follow:

1) Sales Tax
2) Service Tax
3) Gaming Tax
4) Customs Duty
5) Excise Duty

In this article, I will just pick the first 2 indirect taxes – Sales Tax and Service Tax for my discussion. I will try my best not to put you to sleep with all these definitions, but it’s important that you realize how these taxes work in order to understand my argument later.

According to Section 6 of the Sales Tax Act 1972, the sales tax is charged and levied on:
1) All taxable goods manufactured in Malaysia (except those in free zones, Labuan, Langkawi, joint development areas, licensed warehouses and licensed manufacturing warehouses.)

2) Goods imported for home consumption.

Now, that’s quite a mouthful. Basically, what it means is that anything that is produced in Malaysia is imposed a sales tax. What is the rate of sales tax? Here’s the list of sales tax rates:

(i) 5% – Fruits, certain foodstuff, timber and building materials
(ii) 10% – General rate on other taxable goods
(iii) 25% – cigarettes
(iv) 20% – liquor and alcoholic drinks

For petroleum products, sales tax is imposed based on quantity (i.e. litre), rather than sales value.

(1) motor spirit, leaded or unleaded RM0.5862/litre
(2) diesel RM0.1964/litre
(3) liquefied natural gas RM0.0100/litre
(4) aviation spirit RM0.3080/litre

As you can see, the scope of the Sales Tax is very wide, and it encompasses almost everything that’s grown or produced for your consumption. But why is it that you do not see any sales tax listed in the receipt when you are paying for these products as a consumer?

In the manufacturing and production ecosystem, the sales tax is imposed as part of the cost of providing finished materials to the end users like you and me. If the manufacturing process involves more than one manufacturer, there are systems or facilities given to these manufacturers to prevent or recover double imposition of sales tax. In short, these systems are put in place so that no manufacturers that are involved in the production of raw materials all the way to the delivery of the finished goods will be taxed twice in the process.

From the business point of view, these manufacturers must figure out a way to ensure that the sales tax do not eat into their profit margin. Yes, this also means that the sales taxes that have been imposed in the production of the finished goods must be passed on to someone. Yes, there is no better way than to have the end-users absorb the sales taxes. Thus, for almost every finished product you consume, you are not just contributing to the manufacturer’s profit; you are also paying for the tax imposed during the processing of these finished goods in the form of sales tax.

In addition, Sales Tax and Service Tax are paid to the Royal Customs, not to the Inland Revenue Board (IRB).

The Service Tax was introduced in 1975 through the Service Tax Act 1975. Like the Sales Tax that was introduced through the Sales Tax Act 1972, the Service Tax is also a consumption tax – it is imposed on the consumer who consumes the goods or services. Unlike the Sales Tax Act, which can range from 5% to 25%, Service Tax is levied on a flat rate of 5%.

It is also important to note that a Service Charge is different from a Service Tax. Service Tax collected is payable to the Royal Customs, whereas a Service Charge is paid into the pockets of the respective business owner, like a tip.

There is a long list of prescribed services, prescribed establishment and prescribed professional establishment that is liable to pay the 5% service tax. You can refer to this list for a full listing of such services. After you’ve gone through the list, you would have realized that almost all services you use in your daily life is liable to the Service Tax. If prostitution is made a legal profession, I am pretty sure you are going to pay an extra 5% for the ‘services’ rendered.

So, what is the point I’m trying to make here? Simple – as a breathing Malaysian, you should have realized by now that even if you do not exercise your electoral voting rights every five years in the General Election, you are also voting for the government through the taxes you pay. Yes, that is the fact you cannot dismiss, even if you don’t like the idea. The next fact is that the efficiency of a government is as good as the tax her taxpayers submit religiously. I am not even talking about whether the government is fair or downright evil. In this context, the efficiency I meant is the running of the government. Without tax money, the civil servants won’t get paid, the policemen on the street won’t get paid legally, the firemen won’t have the money to pump diesel into their fire engine and the soldiers won’t have the budget to upgrade to the latest military gimmicks. And on the bright side of things, without tax money, there will be no corruption!

Alas, there’s no way that we can abolish tax here in Malaysia. Nevertheless, I know for a fact that the citizens in our neighboring country Brunei don’t have to pay personal income tax. We’ve been made to believe that tax is a law of nature, as natural as the law of gravity itself. To quote Albert Einstein himself, “The hardest thing in the world to understand is the income tax.”

I am not going to debate whether tax is good or evil. The rice bowl of thousands of Malaysian tax agents and accountants depends on the taxation system. The important thing to notice here is that we should be clear by now that our daily consumption decisions and choices have a direct impact on how this government is run.

On the extreme end, we have The Hartal of 1947. In case you have no idea what a hartal means, go watch this excellent short film by Fahmi Reza: http://10tahun.blip.tv/ Yes, when consumption stops, tax money stops… and when tax money stops, what you get is a crippled government.

Boycotting mainstream media that spins groundless propaganda is also one way you are ‘exercising’ your rights as a taxpayer. In the recent Earth Hour event, Malaysia’s environment-conscious citizens decided to switch off their lights for one hour and this action alone has caused a significant dip in Tenaga Nasional Berhad’s earnings for that day. This shows that even the smallest effort contributed by every one of us can amount to quite a huge impact. All the great leaders in history knew that unity is strength, and that’s why it’s in their best interest that their ruled subjects are as diversified and divided as possible.

So, have you got my point? Well, if you still haven?? got my point, and have read this far, let me just summarize it for you: Every actions you take, as insignificant as you might think it is, has an impact to the entire system. It can be just a flush of water or a flip on the switch. All the smallest decisions you make and the resulting actions keep the system in motion. You are not as insignificant as you have been taught to believe. Even if you are not aware about the impact you have on your surroundings as a result of your action, you cannot feign responsibility that your action contributes to a cause (whether if it’s in your interest or not).

But the good thing is, once you are aware of it, you can become the agent of change. Start by exercising your ‘consumer rights’.

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