The budget’s theme about “Prospering the rakyat” sounds good on paper but as we have seen in the case of last year’s budget, the Najib administration will fail to deliver at the end of the day. For example, you give BRIM and a marginal increase for this year but at the same time, you increase the highway toll. How does that prosper the rakyat? This is because the underlying problem of inflation has not been addressed.
Secondly, Najib is talking nonsense about opposition parties using the GST in their own budget document. I would reiterate: GST is a major strain on the poor and average wage earner. It imposes greater tax burden on the ordinary folk in order to fund the financial mismanagement of the leaders.
There is no great achievement in bragging about the increased revenue from GST collection. Of course, the revenue will increase. You are taxing the rakyat through and through. The purpose of GST all over the world is to broaden the tax base and diversify the sources of revenue, and not to raise tax revenue. This is accomplished in most countries by reducing income and corporate taxes simultaneously along with GST introduction – which is not the case in Malaysia. It is a double whammy for Malaysians as they end up paying more taxes than before. In fact, the Najib government has failed in the overall generation of revenue when you consider that it is only because of GST that we managed to save the day.
There is also the failure to deal with the overall financial mismanagement of the nation :
- The issue of increasing household debt is not addressed.
- Housing affordability is not properly dealt with.
- Environmental issues are glossed over. There is no mention of haze and what plans are in store. Enhancement of quality of life for the rural folk is not in the offing.
- Where is the mention of our depleting foreign reserves?
- Why is there complete silence on the plunging ringgit, Asia’s worst performing currency?
- What measures are in place to reduce our dependency on oil revenue?
There is no cheer in the budget for the economy. The Malaysian economy is one of the worst performing economies in East Asia, growing sluggishly not only by the East Asian standards but also by its own. Budget 2016 is very disappointing in the sense that it fails to provide a ‘short in the arm’ that the economy badly needs. Instead of spurring economic growth, the Budget is likely to dampen it. The two main sources of growth for the Malaysian economy are investment and consumer expenditures. There is nothing much in the budget to stimulate investor confidence or raise consumer sentiments.
The Budget 2016 fails to address the crisis of confidence that has badly hurt investor confidence, dented severely by the ongoing financial scandals. Consumer sentiments, hurt by GST, are further eroded by increased income tax rates. As a result, economic growth will take a hit. The economy badly needs a fiscal stimulus in the form of greater private sector expenditures through increased investment expenditures and consumer spending. Alas, the Budget may do exactly the opposite.
A budget is not just about great sound bites and making a show of offering goodies. The three essential elements of public financial management must be addressed: accountability, transparency and governance. This budget has failed to show that the government is serious about these issues.
MOHAMED AZMIN ALI
24th October 2015