By Ralvin Manikam
Instead of giving, the government could be taking from charity if the Good and Services Tax (GST) is implemented April this year.
Non-governmental organisations (NGOs) running homes for the blind today raised their concerns amid fears that the consumption tax would cripple efforts by charitable organisations to raise funds.
Saint Nicholas’ Home for the Disabled executive director Daniel Soon said during a press conference that charitable organisations may consider closing down as the tax took a significant chunk out of donations received to run their organisation.
He said that his wellness centre along with the selling of merchandise generated RM 500,000 per year, which is used to pay for operations costs, and that six percent of this amount would be taxed by the GST.
“Which means it would make it more costly for me to maintain the wellness centre, which in a sense is a shelter workshop,” he said.
His organisation runs a wellness centre that trains the blind to be self employed masseurs, or be placed in employment as masseurs.
When GST is implemented, fundraising events, and the selling of goods would be taxable. These events make up the bulk of the money used to run charitable organisations.
“All the other shelter workshops are going to be hit, and all the items that we sell, because it is charity based, are sold at a higher cost compared to commercial products, so if we charge another six percent, do you think the people would buy?”
Apart from items sold, he said that it would be complex to account for the supply of goods in a carnival, were they to have one.
For the Saint Nicholas Home, they estimate compliance cost to hit RM 30,000.
“The yearly maintenance is a separate cost altogether, we have to employ one person just for GST, so in the end, it would force many organisations to consider closing down,” he said.
He said although the government has time and again said that they needed NGOs, the GST would instead penalise them for their charitable work.
He also said that for the Saint Nicholas Home, the government is subsidising less that three percent of its operating cost, and that is a grant solely for food. The amount cannot be spent on anything else such as electricity, worker’s salary or programs held.
National Council for the Blind executive director Moses Choo asked the government to consult NGO’s before implementing the tax.
“There is a way to apply for exemptions but along the way, its going to be tedious, and despite that, we would still more money spent (to prepare for GST),” he said at the same press conference.
“Looking at a budget of RM two million, we would be spending an extra RM 120 thousand for the year.”
He urged the government to meet the NGO’s and see the kind of expenses they would incur to deal with GST.
Dealing with GST
DAP MPs at the press conference offered some recommendations to deal with the impact of the tax on the NGO’s.
Bukit Mertajam MP Steven Sim and Bukit Bendera MP Zairil Khir Johari asked for the GST to be deferred until the nation succeeds at achieving a mature high income status.
“In light of the potentially negative impact of the GST on charities and non-profit organisations, the government should immediately consider deferring the implementation of the GST until we become a mature, high-income economy with proper government funding structures for NGOs and charities.”
Apart from that, they also suggested that charities, which are tax exempt, are exempted from GST.
“If the GST is going to be implemented anyway, then it is suggested that organisations currently enjoying tax-exempt status should, as a matter of principle, also be exempted from GST treatment.”
In the case that the government is unable to exempt charities and non – profit organisations from GST, DAP recommends the prescribed taxable turnover threshold to RM2 million from the current RM 500,000.
– The Rocket
