Analysis of the American Cancer Society and General Motor Company Ltd Essay

Analysis of the American Cancer Society and General Motor Company Ltd - Essay Example   The American Cancer Society is mainly funded by donors, including the World Bank and various support groups. The World Bank is the society’s largest funder. The society also receives funds from the services that they offer to the cancer patients (Epstein, 2011). Other sources of funding for ACS include investment income, grants, and contributions from well-wishers. The operations of the organization are mainly run through volunteers drawn from all over the United States of America (American Cancer Society, 2011). The ACS is exempt from the taxpayer status, Form 990 of the year 2009 that the Society is a 501 (c) (3) organization which exempt from any tax obligations to the state. This status was granted in 2009 (American Cancer Society, 2011). Ethical issue The ACS, like all other organizations faces various challenges. One of the greatest challenges affecting ACS is self-interest. Investigations conducted on the ACS reveal that the Society has previously shown more interes t in profits than on cancer prevention. In 2005 the ACS estimated that at least 1.37 million new cases of cancer were diagnosed. However, it is alleged that instead of intensifying research on new methods for preventing and combating cancer, the Society focused more on profiting from cancer grants (Isaacs, 2010). For example, an Occupy Wall Street report alleges that the ACS has put a greater financial emphasis on radiation and chemotherapy research than on life-saving prevention methods. ACS faces allegations citing that has focused largely on conventional medication techniques for treating cancer instead of preventive techniques. The accusations also include discrediting physician research on cancer preventive techniques. As such the society is unethical for trying to make money out of the large numbers of cancer patients through chemotherapy and radiotherapy, which are considered unhealthy (Epstein, 2011). Causes One of the greatest causes of this situation stems from the ACSâ₠¬â„¢s culture of working with various stakeholders and particularly giving greater consideration to the views of the organization’s financial supporters (Epstein, 2011). The Society’s financial ties with the drug industry have skewed its policies regarding the environmental causes of cancer and the best approaches to managing it. This interest makes the fight against cancer difficult and has been linked to the increase in cancer deaths and incidences as sufficient preventive strategies have not been put in place because many drug companies discourage it (Isaacs, 2010). While the drug industry wants to make money selling therapeutic drugs and equipment, the ACS wishes to continue benefitting from the considerable financial support it gets from the organizations as well as profits from patient treatments. The other likely cause for the American Cancer Society’s preference for therapeutic methods is that cancer research is quite costly, especially research for prev entive techniques. The organization seems to endorse both chemotherapy and radiotherapy techniques because they are a cheaper alternative in terms of research costs. A lot of research findings justifying the methods have already been provided both by the ACS and many drug companies.  Ã‚  

Keynesian economists Essay Example | Topics and Well Written Essays - 1250 words

Keynesian economists - Essay Example The paper also considers the negative impact of government interference in business as per the suggestions of Keynesian economists. Keynesian economics is based on aggregate demand and government intervention. The theory was created by John Maynard Keyes to explain the Great Depression in the 1930s (Samuelson & Nordhaus, 2010). At the time, the classical economics theories assumed that the free market would automatically self-regulate by providing employment and sustain the economy. Goods and services’ total demand in the economy at a specified time is aggregate demand. Prior to Keynesian economics, the assumption was that a decrease in aggregate demand in the economy would result in fewer goods and job opportunities. This would translate to reduced wages and inflation, which would enable employers to invest and create more jobs. However, the great depression disapproved the theory. Many factors influence aggregate demand. During a recession, the decisions made by the private sector may reduce consumer spending (Higgins, 2013). Similarly, prices and wages gradually respond to the fluctuations of demand an d supply causing shortages or surpluses in employment opportunities. Keynesian economists hold that government intervention plays a key role in solving the problem of insufficient aggregate demand. Aggregate demand represents the spending of the government, public and private sector. Insufficiency in aggregate demand comes about when the spending of all these sectors reduces. The government is in a position to solve the problem of insufficient aggregate demand through active policies like fiscal stimulus package and job creation, which increases spending and restores aggregate demand. Many theories against government interference with business find unbalanced government budgets disturbing for the economy (Higgins, 2013). Nonetheless, Keynesian economists find that government intervention

The predictions of corporate failures Essay Example | Topics and Well Written Essays - 2500 words

The predictions of corporate failures - Essay Example Corporate failures gained higher rates in last two decades. There are lots of factors that lead businesses to fail. Those factors attributed by different economists are high interest rates, heavy debt burdens and recession-squeezed profits. There are lots of industry-specific factors such as government regulation and the nature of operations, can results into to a firm’s financial failures. Studies have found that small, private and newly opened companies with poor cash flow planning and ineffective controlling systems are more exposed to financial crisis than the large and well-established firms. It is very important to have robust and reliable models that predict corporate failure accurately and promptly. It is very important for the management to take either preventive or corrective measure to secure the interest of all the stakeholders. This study would go to discuss about different models for preventing corporate failures and the study would assess the strengths and weakn esses of those models. Financial satiability is very important for any corporate house. Corporate houses are having lots of stakeholders attached with it. It is also an important duty of Government and Financial regulating authorities to keep a close look on the financial health of firm. There are lots of models are there to take preventive actions but it is very important to chose the right one for the right problem. Every model has its own strength and weaknesses. Identification of the proper model for the specific crisis is very important things to follow for any corporate house to avoid corporate failures. Failure of one firm can cause for a serious disaster for all those stake holders related with that firm. According to Beaver (1966), who used classification test to identify different financial ratios for corporate failure predictions. Author used 30 financial ratios and 79 pairs of companies for test

Homework Essay Example | Topics and Well Written Essays - 500 words - 29

Homework - Essay Example The affected age group being mostly children, the analysis is that OM generates indirect costs owing to lost time from school and work creating a significant social burden. A good nurse protocol for otitis media in children aged six to twelve years old should clearly define OM; identify its natural history without antibacterial treatment, measure relative effectiveness of these antibacterial regimens in prevention of clinical failure (Forgie and Zhanel et al., 2009, p. 457). Otitis media is the presence of purulent fluid inside the middle ear, which is associated with symptoms and signs of systemic or acute local illness. It is most prevalent during winter months in children especially six to seven years old and below. Otitis media is commonly seen after a viral infection of the upper respiratory tract. It has been especially noted to result from dysfunction of the Eustachian tube preventing the effective drainage of middle ear fluid. The clinician or nurse should be aware that the client has an antecedent event, either an allergy or infection that results in congestion and edema of the mucosa of the middle ear, Eustachian tube, as well as the nasopharynx. Flow of the middle ear secretions is impeded following the Eustachian tubes congestion. This often increases negative pressure further causing fluid to be pulled into the middle ear. Increase in middle ear secretions causes growth of microbial pathogens resulting in otitis media. Treatment protocol in diagnosis and prescription establishes common pathogens as Streptococcus pyrogenes, Streptococcus pneumoniae, Haemophilus influenzae, Staphylococcus aureus, Moraxella catarrhalis, as well as viral infection. Recent studies show that in 6 – 12 year olds infections have increased because of organisms that produce beta-lactamase and bacterial resistance to drugs (Barnett and Klein,

Obama or Romney Essay Example | Topics and Well Written Essays - 750 words

Obama or Romney - Essay Example Firstly, this brief essay will consider Romney. Romney claims to have a very different view from the President with regards to the Affordable Health Care Act of 2009. However, the fact of the matter is that while governor of Massachusetts, Romney instituted a healthcare plan statewide that served as the very inspiration for the later adoption of the Affordable Health Care Act. As such, Romney continues to attempt to distance himself from this and claim that if he is elected president he will do all in his power to overturn the legislation. Obviously, such a disconnect from action/practice and actuality does not help Romney to appear as a steadfast candidate with regards to this particular issue. Similarly, much the same is true with regards to Romney’s stance on abortion. While campaigning for the gubernatorial race of Massachusetts, Romney went out of his way to emphasize that he was a pro-choice candidate. Similarly, most of the issues that involved abortion he masterfully d odged without coming down too hard in either direction. Yet, as he is running for a nationwide audience now and not merely for the gubernatorial candidacy of a small moderately liberal northeastern state, Romney has tracked to the right significantly and now claims that he will make it a policy directive to use his power to enforce the â€Å"sanctity of life†. Such a disconnect from his prior positions begs the question to what degree Romney is merely playing to the base of the Republican/conservative movement and what degree he actually espouses such a newfound believe in the sanctity of life. The case with Obama is somewhat different. Due to the fact that Obama is a sitting president, it is much easier to measure his actions against the words that he spoke back in the 2008 presidential election cycle. Although like any politician, Obama has embellished a bit and claimed to be able to perform feats that no president be reasonably expected to perform, the fact of the matter i s that in regards to the main issues, Obama has remained decidedly issue oriented and issue focused. With respect to his campaign promise to engage with Congress to create a lasting and historic solution to the issues that face many Americans in regards to healthcare, Obama, with the help of a Democratic controlled Congress, enacted the Affordable Health Care Act of 2009. Additionally, Obama has also made good on his campaign promise to cease military operations within Iraq and bring the majority of combat troops stationed there back home. This campaign promise and its ultimate implementation was an important step due to the fact that it allowed him to take an increased role of tracking al Qaeda and in helping the United States to locate and kill Osama bin Laden; the mastermind of the September 11th attacks that killed over 3,000 United States citizens. It should be noted though that this author does have a strong issue with the President’s foreign policy. Whereas he campaign ed on a platform of military non-aggression and sought to bring the majority of US combat troops home as a function of ending the pointless Iraq war, he entirely failed to keep the

The Eruption of Mount Saint Helens Essay Example for Free

The Eruption of Mount Saint Helens Essay â€Å"The Eruption of Mount St. Helens† On May 18th, 1980, in Washington State, the volcano, Mount St. Helens erupted. This eruption caused widespread terror throughout the towns surrounding the mountain. The magma from the volcano burned up the forest and killed most of the animals in the area. It affected the wildlife greatly because, after the eruption, the ecosystem was burned and smoldered thus killing thousands of animals in the region. This eruption was the deadliest of all the volcanic activity in the United States, and the people who live near the mountain are still affected by what the eruption did to this day. There were many warning signs that preceded the nine-hour eruption of Mount St. Helens. After being dormant for 123 years, the volcano showed her first sign of life on Thursday, March 20th. There was a 4. 1 magnitude earthquake that centered directly underneath of the volcano. A week later, the snow on the mountain smudged because of the ash. On March 30th, 79 earthquakes were recorded on the mountain! A few days later, on April 3rd, tremors were recorded signaling movement of magma deep within the volcano. By that time, ash, rocks, and ice chunks were daily occurrences and the slopes were ash-covered. A few days before the eruption, it all stopped. But on May 18th, it all went wrong †¦ On May 18th, 1980, the worse volcanic eruption in United States history occurred. Mount St. Helens, in Washington States, violently erupted. At 8:32 A. M. a 5. 1 magnitude earthquake struck about one mile below the mountain, causing the largest landslide in history. The snow and ice moved at speeds of more than 175 miles per hour and removed over 1300 feet from the summit, sweeping away almost the entire North side of the mountain. The landslide raised temperatures about 60 degrees higher than usual. There was a lot of ash that came out of the volcano when it erupted as well. The ash caused a major problem to the townspeople because it contaminated the oil systems, clogged air filters, and scratched any moving surfaces, like cars and other vehicles. Particularly small, finer ash particles caused electrical shorts in transformers. This caused town wide blackouts. Also, the elevation of the mountain dropped from 9677 feet to 8363 feet. It decreased more than 1300 feet! This famous eruption had many affects on the wildlife and the people in the region. Thousands of small game, fish, insects and birds were killed along with black-tailed deer, elk, bears, and goats. All life in Spirit Lake was slain as well. The residents and visiting tourist of the area were affected too. There were a lot of architectural damages. For example, about 250 houses were obliterated. Roads and railways were destroyed. Also, 27 bridges were demolished. 57 people died and 36 more were rescued from being trapped underneath of debris or in their cars. There was significant crop loss in the area, about $100 million. The logging industry was hit hardest. About 25% of the forest had been wiped out, enough to build 300,000 two-bedroom homes! This eruption did not take it easy on the area. Despite how much damage it did, people still came together to try to help out. Their efforts have really paid off. Most of the houses have been rebuilt. But some still suffer from the flood damage. A significant number of trees have grown back, too. However, the timber industry isn’t back to the rate it was before the eruption, but it is still recovering steadily. It has been a pretty long time since this occurrence, but Spirit Lake still is inhabitable for fish. Only small creatures and bacteria can survive. Many people wonder â€Å"When can we expect it erupt again? † No one can really tell for sure. The eruption of 1980 wasn’t predicted, and future eruptions will probably also be unpredictable. But before the eruption of 1980, the volcano had been dormant for well over 100 years. The volcano can erupt whenever it wishes, whether it be tomorrow or another hundred years from now! Well then when will it erupt? Only time will tell.

GST system: Hurdles to implementation

GST system: Hurdles to implementation Executive Summary The differences between the current Sales and Services tax structure and the proposed GST system is also analysed. The current single stage sales and services tax is from 5% to 10% while the proposed broad based GST is 4%. This report also determines the importance of GST to the governments fiscal policies and the potential negative impacts of the proposed GST system to business entities and the people. The main purpose for introducing GST is to make the current taxation system more comprehensive, efficient, effective, transparent and business friendly. The potential negative impact is the problem of price hike as a result of inefficient price control and the additional compliance costs for businesses to have additional work to track input taxes paid. The possible hurdle Malaysia government faces in the process of implementing this new system is also being discussed. The significant informal sector makes the tax system inequitable. Besides, lack of transparency bred uncertainty among the business community. The huge maintenance cost each year of RM8.5 million is burdensome. Moreover, choosing the most suitable tax rate and determine the goods that should exempt take long time. Finally, because exports are generally zero-rated, this is often where GST fraud occurs. This report also critically discusses the tax issues that have arisen as a result of implementing GST/VAT in certain developing countries. The major reason for the decline in Ukraines VAT to GDP ratio lies in the Ukraines tax administration. On the other hand, the VAT evasion, hidden economy size and corruption in Ukraine are closely related. In doing this reports, we conducted our researches through books, journals, online materials, government websites and electronic newspapers. However, there were several limitations while conducting the study. There were only limited numbers of countries which have implemented GST successfully until today. In addition to that, most countries that adopted GST were developed countries such as Australia, Singapore and etc. There were limited numbers of Asian developing countries which has implemented GST. In conclusion, GST can be an effective indirect tax. To make it a success, effective educational programmes and private and public sector partnering is necessary. In planning and implementing the GST, countries like United Kingdom, New Zealand, Australia and Singapore can be used as learning examples for Malaysia. The contributions of our tax systems, especially the consumption taxes to the development of our countrys socio-economic system Accoding to OECD (n.d.), the main purpose for the introduction of tax is to finance the public expenditures as well as addressing socioeconomic concerns. In the globalized market today, most of the companies and individuals are required to pay taxes. Malaysia has adopted a fiscal-like system for the past few decades. Malaysia taxation system comprises of direct and indirect taxation. Examples of direct taxation income and corporate tax whereas indirect taxation includes sales and services tax and also others. Refering to the table 1 below, in 2008, direct taxes accounted for about 51.4% of total taxes and 19.1% comes from indirect taxes (Zakariah and Sulaiman, n.d.). Out of this 19.1%, sales and services tax (consumption tax) accounted for 7.3% of the indirect taxes. Therefore, consumption tax does plays a vital role in total revenue in the country. Table 1: The breakdown of Indirect Tax Revenue in 2008 Table 1: The Gross National Product in Malaysia from 2005 to 2009 Source: http://www.tradechakra.com/economy/malaysia/gnp-of-malaysia-152.php Table 2: Gross National Income expressed in Purchasing Power Parity Dollars Source: http://www.google.com/publicdata?ds=wb-wdimet=ny_gnp_mktp_pp_cdidim=country:MYSdl=enhl=enq=gnp+malaysia Table 2: Gross National Income expressed in US dollars Source:http://www.google.com/publicdata?ds=wb-wdimet=ny_gdp_mktp_cdidim=country:MYSdl=enhl=enq=gdp+malaysia Correction of Market Failures Consumption tax in our country provides a way of changing the pattern of consumers demand by differentiating the prices of goods, this in turn affect their spending decisions. For example, demand for different types of transports will get affected by the total amount of duties charges. From this point, we can see that consumption tax in Malaysia is considered as an instrument in correcting related market failures, for example, externalities. Moreover, in this context, consumption tax is used as a tool in making the polluter pay as well as internalizing the costs of consumption. Increase Overall Productivity Consumption tax in Malaysia is said to have a lower negative impact on the work incentives. This is because sales and service tax leave the choices to the people and is unlikely to distort the alternatives that consumers have to between work and leisure. People tend to work harder when they are allowed to keep more of what they earn. This will then impact on the economic positively and increase the overall productivity of the country. As shown in the figure above, Malaysia GNP and GDP has been increasing over the past 20 years. Improve economic and social overheads Malaysian economy experienced the rapid growth on the GDP from US100Billion in 2002 to US221Billion in 2008. In addition, according to governments data, our country also sees the drop in budget deficit from 7.4% in 2009 to 5.6% in 2010. It is believed that the decrease in budget deficit mainly due to the revenue collection from tax and it is able to stimulate the economic growth by financing investment, which in turn generates higher income and employment through the multiplier effects. Thus, government is able to gain access to immediate rise in money and invest them in the economic and social overheads. In a developing country like Malaysia, consumption tax can be an important instrument of growth as it promotes capital formation, especially in the promotion of social overheads as well as infrastructure. The diagram below shows the importance of sales and service tax in contributing their part to the economy in the indirect tax form. The importance of GST to the governments fiscal policies and our countrys economy Despite the average surpluses of 2% during 1993-1997, Malaysia is brought back to deficit after financial crisis in 1997 (Mahbob Zakariah, nd). Year 2009 saw the biggest fiscal deficit. In responding to the fiscal pressures, Malaysia government focuses on importance of tax rates, an important element under fiscal policies, to alleviate the recession effects. Many developed countries such as US and UK often raise their taxes to overcome fiscal deficits. Often than not, fiscal imbalance tends to lower national savings, thus cause slower economic growth. In order to overcome the problem, government will need to reduce government expenditures and/or raising tax revenues. In fact, the International Monetary Fund reported that it is important for Malaysia to introduce Goods and Services Tax (The Star, 2010). The government managed to lower the fiscal deficit from 7.4% in 2009 to 5.6% in 2010 (The Star, 2010). Besides that, to avoid the middle-income trap, the introduction of GST would help with the socio economic development. An additional estimated RM1billion revenue collected from GST can be well spent and further improve the Malaysias development initiatives, such as transportation, healthcare, education and targeted added value activities. With this, the way GST is utilized will determine whether our country can achieve develped country status by year 2020. Fiscal Policies Create an effective management of tax system GST is imposed at the stages of production and distribution; therefore incorporate a self policing mechanism that lowers the possibility of revenue loss through tax evasion. The proposed GST model will not involve cascading/pyramiding affect (Mahbob Zakariah, nd). This is because tax levied on any goods is determined based on its final value, but not the total number of distribution channels that a particular good passes through. Moreover, in order to avoid the double taxation effect, the output tax to be paid will be offset against the input tax. Widen Malaysias tax base The introduction of GST alleviates the heavy reliance on direct taxes (for example, income tax) and petroleum tax, thus widen Malaysias tax base. Petroleum revenue is reported to be unsustainable in the long run as it is depleting (Mahbob Zakariah, nd).. However, the main issue here is that government has increased its dependence on petroleum revenue as shown in the diagram. When comparing against income tax, GST would be a much stable source of revenue as it is less vulnerable to economic uncertainties. GST is a consumption-based tax, an individuals concumption will determine the amount of tax ones pay. Economic Growth Attract foreign direct investments According to Zainal (2007), Malaysia has been engaging in activities that attract foreign direct investments but it is not fast enough. Koong (2010) reported that proposed GST in Malaysia would be able to allow for a further reduction in the current corporate and indirect tax rate, thus draw in more foreign direct investment to the country. This is because proposed GST would be able to provide a more broad-based tax collection and revenues. Currently, Malaysias corporate tax rate is relatively high compared to other neighbouring countries (Amin, 2009). This is one important key to achieve high-income developed status by year 2020. The introduction of GST assertively realizes high value added economic paradigm. In addition to this, with effective in reduction in corruption, Malaysias GDP will be improved. According to Datuk Akbar Ali (2010), a study showed that an increase of one point in the Corruption Perception Index (CPI) will attract FDI which is equivalent to 0.5percent of the G DP and pushed up the average income by 4 percent. Boost the growth of SMEs (Small Medium Enterprises) GST is not a progressive income tax and it is flat at the determined rate. Therefore, GST preserve the incentive to work and encourage the growth of small medium enterprises. According to Khoo (2010), in line with the proposed GST, it is also important to consider the broadening of tax allowances to include shopping malls, conventions and office buildings will help in reducing corporations burdens. This is especially for those SMEs which incurred high costs and risks in doing business with limited funds. Tax allowances will be able to allow them grow more quickly. Differences between Sales and Services tax structure and the proposed GST system The current sales and services tax is from 5% to 10% while the proposed GST is 4%. 1. Single versus multiple stage GST is charged on the consumption of goods and services at every stage of the supply chain while the current sales tax and service tax is levied at only one stage of the supply chain. 2. Goods and services subject to tax Both GST and Sales Tax operate on a negative concept all goods and services are subject to GST unless specifically exempted. Service tax, on the other hand, operates on a positive concept where only services that are specifically prescribed are taxable. The wider tax base of GST provides more revenue for government and simplifies the task of identifying taxable services under the service tax system. 3. Tax payment and accounting periods In existing structure, sales tax becomes due and payable when there is a 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. Time of supply 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. The GST concept of time of supply is therefore generally wider and there will potentially be changes to the enterprises cash flows under the new tax. 4. Imported services and intangibles Presently, imported services are not subject to service tax. In many GST regimes, imported services are subject to GST through the concept of a reverse charge whereby a supply received from overseas is treated as being made by the recipient of the service rather than by the provider of the service overseas. The recipient of the supply is responsible for the output GST on the imported services. 5. Group registration Company can file consolidated GST returns via group registration to reduce their GST administration costs, where supplies made within a group would be disregarded for GST purposes. This resulted in better cash flow management for the group if goods and services are regularly supplied between group companies. On the other hand, the existing tax structures do not allow consolidated tax filings. In service tax, group relief is available for certain professional services when provided to companies within the same group and subject to certain limitations. The negative impacts of the proposed GST system to business entities and people Timing Problem The present climate of the Malaysian economy is not conducive for the implementation of new tax system. The impact will be contractionary as GDP drop 139% in 2010 compared to 2005 while inflation has been increasing from 2% in 2008 to 5.4% in 2009 due to increases of prices of major inputs like oil prices (CIA World Factbook). Negative impacts to people Currently only 1.8 million individuals from total of 12 million in the workforce paid tax for their salary, but with GST, the entire workforce will be required to pay tax (Malaysian Digest.com, 2010). People earning below average salary will be forced to spend extra annual expenditure in the midst of inflation due to the regressive nature of GST. It is predicted that a slight increase in the prices of goods and services is unavoidable. Although the GST will probably be 4%, the scope of goods and services affected by GST will be very much wider. Moreover, inefficient price control by government results in price hike by unscrupulous traders. This phenomenon is shown in the multiple-fold escalation in prices in almost all products as a result of slight increase in oil prices. Negative impacts to business Economy of Collection indirect and direct compliance cost: GST imposes additional compliance costs for businesses to have additional work to account for the tax, tracking of the input taxes paid, undertaking reconciliations and filings of GST returns (Zaid,2010). In addition, where a business has short credit periods from its suppliers, business need extra finances to purchase supplies when GST is first introduced, result in cash flow burden. Therefore GST is less effective according to Adam Smiths cannon of effective tax system in relation to economy of collection. Neutrality Altered consumer behaviour: One of G.W. Normans qualities of taxation depends on non-interference, i.e. a tax should not impact on the price or volume of commodities traded. Norman argued that value added tax are interferent, as they create imperfections in the market for goods, and in particular for preferences between imported and domestic produce. 90% of Malaysian is not in taxed category and this group of people have to pay taxes for their daily consumption if GST is implemented, which will dampen their spending mood. This would affect SMEs who depend on this group of customer base. Higher bank charges for credit card transactions as a result of GST implementation will raise prices in certain products, adversely affecting SMEs. Experiences in other countries have shown that customers generally go on a shopping spree shortly before the introduction of the tax, followed by a period of relative inactivity after the tax is introduced. Companies may seek extra financing to build up stock to cater for a pre-GST rush. However stock in hand may not be entitled to any input tax credit. Cash Flow issues: GST will hit the cash flow of SMEs, especially businesses with significant funds tied up in unpaid invoices. Businesses need to meet their immediate liabilities to suppliers, staff and the IRA, particularly around tax time. Some businesses were forced to adopt unfavourable ways such as higher deposits or stiffer terms of trade which make small businesses less competitive (Zaid,2010). This condition worsens if tax refund mechanism is not efficient. To register or not to register: Business not subject to the GST would not be entitled to claim the input tax credits on purchases. In a situation where the customers of the business are other GST registered businesses, the supplier may be obligated to license itself as it is likely that the customer would insist on buying from another registered person to enable him to claim the input tax credit (Zaid,2010). Consequently, these SMEs will have to charge higher prices to the customers, eroding their price competitiveness (Zaid,2010). A Supply-Demand Analysis of a GST-Taxed Market Deadweight loss happens if the income lost by the economy is greater than the governments income; the tax is inefficient. While distortions occur, GST are often considered superior because they distort incentives to invest, save and work less than most other types of taxation in other words, a GST discourages consumption rather than production (Zaid,2010). Hurdles to implement GST faced by government Government need to balance the conflict between simplicity and to cater for social needs. However, the more social needs are catered for, the more complex the tax becomes and the more costly it is for the Government to administer and for businesses to comply with it (Trade Chakra, 2010). Informal economy Emran and Stiglitz (2005) argue that VAT is likely to reduce rather than improve social welfare because informal economy like agriculture sector and unregistered business are able to escape commodity tax coverage dominates DTE (Developing and Transitional Economies). According to World Bank, informal economy constitutes 31% of Malaysian economy, almost double the percentage in other Asian countries such as Vietnam (15.6%) and Singapore (13%). The producers of close substitute of the formal VAT-liable commodity will get high profit without bearing tax while formal sector producer may get lower profit and bearing tax. As a result, resources will be channelled more into informal economy, causing inefficiency in resource allocation. Thus the potential tax base is rather narrow which reduce the growth and development. Therefore, achieving equity as proposed by Adam Smith in order to have an effective tax system is difficult through the implementation of VAT in a country that has significa nt informal sector. Lack of transparency PricewaterhouseCoopers Taxation Services Sdn Bhd senior executive director Wan Heng Choon said the lack of transparency bred uncertainty among the business community. The industry guides that will provide guidance of how the GST law will affect various industry sectors have not provided the certainty that was promised. Cost BN government aims to gain RM1 billion through GST, but within the implementation process, a sum of RM222 million has been allocated as initial cost to ensure the smooth and effective implementation of GST system in Malaysia. The allocation will cover the cost of developing the GST computerisation system at RM139 million and the additional operations cost of RM83 million for the agency implementing the system, Malaysian Customs Department. The maintenance cost each year is estimated at RM8.5 million (Office of the Prime Minister, 2010). Rate of tax and exemption The government should carefully choose the most suitable tax rate so that the tax will not burden the poor. If the government offers lower tax rate on necessities with the intention to help the poor, in fact this will benefit the rich more because they will spend relatively less of their income. But high rate in luxury goods trigger the intention to lower tax liability either legally or illegally. Choosing the most suitable tax rate and determine the goods that should exempt are not easy for government and may take long time. Fraud Because exports are generally zero-rated, this is often where GST fraud occurs. In Europe, the main source of problems is called carousel fraud. Large quantities of valuable goods (often microchips or mobile phones) are transported from one member state to another. During these transactions, some companies owe GST, others acquire a right to reclaim GST. The first companies, called missing traders go bankrupt without paying. The second group of companies can pump money straight out of the national treasuries. Reasons of initial failure in GST implementation in two countries example Value Added Tax (VAT) works better than other general sales tax in many of the developed and developing countries. This does not mean that VAT always works well. There are many different reasons for the above conclusion, however only two main issues will be highlighted in the following examples. They are problems with VAT design which were left behind by the policy process and how VAT plays its roles particularly in the low-income countries. Is the country capable enough to administer VAT? The case study below will discuss the problems faced by Ukraine when implementing VAT. A case study in Ukraine Like many other developing countries, VAT has been the workhorse in generating revenue in Ukraine. The way of VAT works will determine the performance of Ukraines entire fiscal system. However, table below shows that Ukraines VAT was in trouble since the tax fully came into effect in late 1990s. The collection inefficiency of VAT lead to the decrease in revenue with respect to the countrys GDP, thus widen the gap between actual revenue and potential revenue (Bird, 2005). In general, as GDP grows, VAT yield should also rises, with at least at the same rate as GDP. However, when Ukraines real GDP rose by 49% from 1998 to 2004, the VAT to GDP ratio was decreased by 33%. Moreover, the increasing dependence of VAT on imports caused the collection of VAT on domestic consumption fell markedly by 4.3% to 1.4% of GDP in 2004 (Bird and Gendron, 2006). It is very clear that VAT system in Ukraine is less efficient in generating revenue for the government. According to Bird and Gendron (2006), the decline in VAT to GDP ratio before 2002 could be explained by the ineffectiveness in the Ukraines tax administration, for example the erosion of tax base in the form of increased exemptions which started immediately once the VAT was introduced. There were just too many exemptions in the VAT. For example, many food processing were taxed at a special rate while later on were allowed to claim the refund. The VAT system later became more complicated as it seemed to give ways for possible evasions and corruptions. However, there was no base changes occurred during 2003-2004 that could possibly explain the decline. There were many Ukraine taxpayers tend to evade when they were trapped within the VAT system. They could possibly hide in the hidden economy. Meanwhile, the VAT evasion, hidden economy size and corruption in Ukraine are closely related. Recently, there was a study found that there was a positive correlation between evasion level and Transparency International (TI) index of perception of corruption (Bird, 2005). Additionally, the evasion in Ukraine was twice the corruption index, which was about 38%. This not only reflects the weak administration but also weak management in structural problems such as the prevalence of underground economy. For example, just two years after the introduction of GST, there were over 83% of the Ukraine VAT registrants filing tax returns annually. In addition, there were also problems with tax administration that related to the application of VAT at the border. A country like Ukraine which is unable to apply VAT on imports properly is said to be facing higher level of difficulties in applying the system to domestic economy. Most of the time, the initial legislation of VAT was closely related to standard international model with participation of international experts. It may look simple at the initial stage, however, as time goes; many countries found that VAT tends to become much complex and difficult to manage. The case study below will discuss the problems faced by Pakistan when implementing VAT. A case study in Pakistan In 1990, Pakistan introduced the GST for the country to replace its Sales Tax Act. As a developing country, Pakistan decided to take the initiative and move a big step forward to introduce GST as GST was said to have futuristic dimensions and political recognition. However, several issues were addressed in relation to the introduction of GST, which remain part of continuously reform process. Undeniably, the introduction of GST in the country has brought about significant improvement in the revenue collection (as shown in the table below). Despite the good performance in revenue collection, there were several shortcomings that were addressed. Multiple Tax Rates In 1992, Pakistan introduced VAT at the rate of 12.5%. In 1995, the rate was then raised to 18% in order reduce the budget deficit by meeting the need for extra revenue. However, there was great pressure from taxpayers in 1998, thus the rate was again reduced to 15%. While on the other hand, industrial raw materials were imposed with a higher rate of 20% (Shahid, n.d.). Moreover, in 1999, a penalty system was established in which a 3% tax was imposed on the supplies made by the registered body to unregistered body. Nevertheless, all these decisions have made the VAT system much complicated with multiple tax rates and create many difficulties for the tax administrative. Additionally, cost of compliance has also increased respectively for the taxpayers (Ehtisham, 2010). The rate was then stabilized at 15% in 2004 (Shahid, n.d.). Registration When GST was first introduced in Pakistan, taxpayers were all required to submit a large amount of documents needed for VAT registration purposes. This then cause unnecessary delays during the physical verification process by the VAT staff as there were just too many documents (Ehtisham, 2010). However, a centralized Registration system was introduced in July 2004 in which it utilized Risk Based Registration Module to handle the paper based registration problems (Shahid, n.d.). Tax Compliance Low tax compliance in Pakistan is another issue that has to be looked into. There were only about half of the tax registrants file their monthly returns. This is mainly due to the negative relationship between the tax administration and tax registrants as mentioned earlier under the registration section (Ehtisham, 2010). The facilitation strategy was then designed and the taxpayers were educated on the related strategy in order to overcome the problem. Adjudication There were numbers of adjudication after the introduction of GST in Pakistan due to unaffordable rate. There was a markedly increase in the number of appeals when the appellate foras were introduced (Shahid, n.d.).. The costs involved were time and revenues. The cost of doing business for taxpayers has been significantly increased due to the involvement in the settlement of the cases. The issue has been addressed and discussed for a couple of years before any action was taken. According to Shahid (n.d.), tax administration finally came up with Alternate Dispute Resolution (ADR) mechanism in which consists of an independent judicial committee to deal with the cases. Conclusion The main purpose for introducing GST is to make the current taxation system more comprehensive, efficient, effective, transparent and business friendly. GST is expected to increase government income and dependence on oil revenues is hoped to be lessen. Besides, GST is aimed to reduce public administration deficit which hit a more than 20-year high of 7.4 per cent of gross domestic product in 2009 (Zaid). Additional RM1bil in revenue will be received for the first year, while the business sector would save RM4.1bil and export sectors would save RM1.4bil (Zaid). The potential negative impact of the proposed GST system is the problem of price hike as a result of inefficient price control by government. GST also imposes additional compliance costs for businesses to have additional work to track input taxes paid, and undertaking reconciliations and filings of GST returns. Malaysians who are not in taxed category have to start paying taxes for their daily consumption, which will dampen their spending mood. As a developing country, it is important for Malaysia to review its fiscal policy continuously. To enhance the competitiveness in the international market, Malaysia must always prepare itself for any possible economic uncertainties. Malaysian government should always make sure sufficient revenues are raised for the country with minimum impacts on its people and resources, while at the same time improve the living standards of the poors. Moreover, government should always seek for ways to lower poverty level in the country, thus a more equitable society can be achieved. In conclusion, Malaysia govenrment and the people in the country have not get themselves ready for the tax reform. There should be continuously review of the policy and the tax reform should only be implemented once the impacts on the country and people is minimized.