Recent months have seen various Ministers, including the Prime Minister Datuk Seri Najib Razak himself putting forward the proposal that as the Goods & Services Tax (GST) gets implemented, the Government will concurrently reduce our income tax levels.
The latest Minister who has joined the fray is Datuk Idris Jala, the CEO for PEMANDU and Minister in the Prime Minister’s department, who went further to argue that only with the GST, accompanied by reductions in income taxes will the Government be able to fund its policies for the poor.
Datuk Idris Jala said that “with the GST in place, all 28 million Malaysians will pay a little bit which then allows to reduce corporate and income tax and that’s how we can find enough money for the poor people.” The statement is a little shocking coming from Datuk Idris Jala, who’s normally fairly sensible, and completely perverse in its logic.
Today, only approximately 15% of the working population earn enough to afford paying taxes, and that means that the overwhelming majority of the work force is earning less than RM3,000 a month. They are not paying taxes not because they do not want to, but because they are not earning enough to.
What the BN government is proposing to do is to reduce the taxes paid by the wealthier 15% of the working population, and redistributing the tax burden to the 85% who currently do not earn enough to qualify to pay taxes.
The irony is that now the Government is arguing that by taxing the rich less, taxing the poor more, they will be able to source increased funds to support the poor! In effect, the Government is arguing that the wealthier segments, particularly the corporates should stop funding policies in support of the poor, and the poor should fund policies for themselves!
There is no question that the Government cannot rely heavily on taxes derived from the oil and gas sector which today constitutes close to 40% of all government revenue collection. However, the way to do it is not by crudely taxing the rakyat more, particularly those from the lower income groups. Otherwise, should Petronas “strike oil” again and is able to increase its revenue contribution to say, 60% of total government revenue, does it mean that the Government will then increase GST to say 10% for the purposes of “broadening the tax base”?
The appropriate method to increase and broaden our income tax base is to implement policies funded by our oil and gas windfall profits which will raise the income and productivity of ordinary Malaysians. Such policies will include drastically improving the quality of education as well as setting a reasonable minimum wage. Once the income levels of Malaysians increase, automatically, based on existing tax structures, more Malaysians will be paying taxes and the Government will be able to “broaden” its tax base without burdening the poor.
In the short term, the best measures for the Government to implement to increase revenues and reduce expenditure is to introduce competition into all its policies – such as competitive auctions for state land to maximise revenue, and competitive tenders for all privatisation and procurement projects to minimise cost and reduce leakages through wastage, rent-seeking and corruption. Such measures, if imposed with political will, will be more than sufficient to fund policies for the poor in the short to medium term.
7 comments:
The GST will fund the ostentatious and opulent lifestyles in PutraJaya.
Fat hope it will ever trickle down to the poor.
Aiyoo, tara faham ka? If you want to tell a lie, lie BIG!
"All this was inspired by the principle--which is quite true within itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods."
Adolf Hitler, Mein Kampf, Vol I, Chapter X
Shut down Nat Service, we will get enough money for extra scholarship to fund education for the poor. Shut down permata, we can get enough money to fund poor single-parent families. Cut down unnecessary travels for the PM, RM & ministers (& their extended families), we got enough money to buy medicine for all!!
This present govt is topsy turvy and they can't manage it well anymore,so we must change to a new one in the coming GE13.End of the story.
Do you know...
THAT THIS SATURDAY, THERE WILL BE A 1MALAYSIA 1.5KM RUN FOR EVERY SCHOOL NATIONWIDE SIMULTANEOUSLY TO ENTER INTO THE MALAYSIA BOOK OF RECORDS.
EVERY PRIMARY AND SECONDARY SCHOOL WILL HAVE THEIR PUPILS DRESSED IN THEIR HOUSE COLORS...BLUE, GREEN, RED AND YELLOW!!!
WILL THIS ALSO MAKE IT INTO THE BIGGEST YELLOW PUPILS RUN IN THE WHOLE OF MALAYSIA?
WILL THE GOVT PREVENT THE PUPILS FROM DRESSIG IN THEIR YELLOW HOUSE COLORS?
A major and shocking report from global investment bank UBS is published this week which says that Prejudice in race, gender, class, etc harms economic growth.
The economist Paul Donovan who wrote it is coming to KL next Tuesday to talk about his global economic views but hopefully someone will ask him why he did not mention Malaysia’s NEP policy as one of the biggest stumbling block for economic productivity and stemming the brain drain out of the country.
Here's the summary:
Prejudice is bad, Prejudice is visible.
Social prejudice and economic development have a two way relationship.
Prejudice is most likely to take place amongst lower income economies. However, prejudice is also likely to act as a brake on economic growth. Prejudice is a symptom of a poor society, but also something that will likely (at least relative to potential) keep an economy poor. Taking data on competitiveness from the World Economic Forum, and survey evidence of prejudice from the World Values Study Group, we can examine the correlation of prejudice and economic competitiveness and development.
Competitiveness vs Prejudice.
Our analysis is based on an original assessment of these two key data sets. We start by setting out the relationships between prejudice and economic development, and then look at why prejudice weakens growth potential. The unique contribution from this analysis is to look at the correlation between the competitiveness data and the tolerance indicators.
The risks of the financial credit crunch; this is a really, really bad time to be prejudiced.
One of the subtle risks arising from the financial credit crunch is the risk that prejudice will increase in the near future. This is due to the nature of the economic consequences of the financial credit crunch. Prejudice destroys human capital by undermining innovation and denying talent the ability to reach its full potential. This is never good, but at this particular moment in time the damage could be magnified. Economies can not rely on dynamic growth (investing in capital) in the same way that they have done in the past. Innovative growth is essential in the years ahead – to overcome the problems created by a higher global cost of capital, and to deal with the challenges of an environmental credit crunch that constrains available resources for growth.
21st Century Luddites.
Prejudice is not something that has often impinged on investment decisions, except in extreme cases (apartheid, for example). This should change. The macroeconomic consequences of prejudice should be considered a “sell” signal, in our opinion. Prejudice in whatever form – including racism, sexism, homophobia, religious intolerance – irrationally destroys the value of human capital. The consequences of this for economic development in our view are at least as negative as was the destruction of physical capital of the Luddites in the nineteenth century.
Agreed on excesses and there is urgent need to relook at how to trim "fat". However, what is the YB's plan to replace oil revenue which is, we all know, not sustainable. I would like the opposition to post an alternative budget and "new" sources of revenue. Until this is done, how can some of us have full faith in what we can expect. Unfortunately, this is politics and some would say, better be the "devil that you know, than the devil that you don't". To many of us, this is really something we would like to see.
Post a Comment