PRESS STATEMENT | 25 OCTOBER 2013

Rich man’s budget, poor to get poorer

 

The implementation of the Goods and Service Tax (GST) as announced by Dato’ Sri Najib Tun Razak in his budget speech in Parliament today is a heavy blow to the poor and the lower income group.

 

Furthermore, starting at 6%, it is exorbitant. Comparing to Singapore’s GST at the current rate of 7% is also misleading because when it was introduced in 1994 it was only at 3%. And this is after 13 years.

 

In any event, comparing to countries like Singapore and those in Europe is pointless because of the much higher level of governance in those countries.

 

For Malaysians, the cost of living is already high enough without the GST. With this tax now, a heavier burden is placed on the poor since they have little choice but to spend most of their disposable income.

 

The argument by Najib that GST will cause many goods and services to actually cost less is totally false and a serious misrepresentation to the people.

 

They will not be able to leverage on the GST with greater savings and investments unlike the rich and the higher income group. This will create greater real inequality and cause further social injustice.

 

If last year’s budget was a ‘people’s budget’ because of the May general election, then this is a “rich man’s budget” because the UMNO-Barisan government feels that it is no longer beholden to the people.

 

They held back the GST because they knew the opposition from the people. Now that the elections are over, it’s a different story altogether. So, the poor are set to become poorer.

 

I foresee cumulative inflationary pressure and more increases in cost of living.

 

The thrust on driving greater tourism, building more 5-star hotels and vying with the world to have the best cities has little resonance with the people.

 

Where is the effort to bring down transportation cost or to improve public transportation services? There is nothing on making homes more affordable. Health care has been neglected.

 

Though the allocation is substantial, the problem again will be the diffusion and distribution of the funds. Last year’s excessive and questionable expenditure on English training is just one example.

 

The entrepreneurial fund by way of soft loans to ease unemployment among graduates will be only lead to greater indebtedness. What these graduates need is greater soft skills and more training in vocational and technical areas to enhance their employability, not more debt. The proposal to fund SPM leavers for vocational training is good in

principle but the follow through and the actual areas of specialization is important.

 

We all agree that the budget deficit must be reduced but extracting more money from the people is not the way. The fundamental problem concerns leakages, wastages and corruption. Without comprehensively dealing with this problem, we are looking at a bottomless pit. No amount of taxes collected will solve the problem.

 

 

MOHAMED AZMIN ALI

Deputy President