GST will further slow down the “people’s economy”

KUALA LUMPUR - Prime Minister Najib Abdul Razak speaks rhetorically about the “people’s economy” and “Buy Malaysia”, but there is one major “miss” which is indeed disappointing: GST will only further hold back the economy.

“The 2015 Budget revision should prioritize ordinary Malaysians, the 99 per cent,” said Bukit Mertajam MP Steven Sim in a statement. “How can the government cushion Malaysians from the slow down? At this point, Najib has no choice but to defer the implementation of the Goods and Services Tax (GST).”

In this economy, he added, wages are going to be stagnant, bonuses put on hold, jobs may even be cut back, and the weaker ringgit against global currencies means more expensive goods and services.
“Thus, imposing GST at this moment is akin to rubbing salt into our wounds. And taxing consumption will only slow down the market even further, launching us into a vicious downward spiral.”

He noted that GST will only bring in 2 per cent of the projected 2015 government revenue. “Some of the Ministers and government supporters argued that now GST seems to be ‘one of the lights at the end of the tunnel’ to help increase government revenue in light of the lower oil prices.”

GST is projected to bring in about RM23.2 billion in revenue next year, he pointed out. “However exemption of the new tax will cost about RM3.8 billion. Further contra that with the foregone revenue from the abolished Sales and Services Tax of RM13.8 billion, the government will rake in a balance of about RM5.6 billion in revenue from the new consumption tax.”

This is a mere 2 per cent of the government’s original projected revenue in 2015 of about RM235.2 billion, he estimates. “According to the Prime Minister, the loss in revenue from lower oil price is expected to be around RM13.8 billion, about 6 per cent of the original projected revenue.”
What does this say?

“GST to cover for loss in oil revenue is a ‘crude’ joke on the 99 per cent, especially the low and middle-income Malaysian household.”
First of all, he said, for a mere 2 per cent of the revenue to the federal government, ordinary Malaysians will be burdened heavily. “According to research by the Penang Institute, the average household is expected to pay 2.5 per cent of monthly income as GST which amounts to about RM1000 a year. The hardest-hit will be low and middle income households. The government is essentially distributing its fiscal burden to ordinary Malaysians, especially the poorer segment of the society."

Secondly, he said, the GST would hardly cover even half of the lost oil revenue.
Why should ordinary Malaysians be burdened unnecessarily for a solution which does not solve the problem at hand?

Thirdly, he continued, “I have previously highlighted the existence of about RM7.8 billion in slush funds for the Prime Minister’s Office”.

These add up to about eight times the 2015 Budget of the Penang state government, he estimates. “The amount is more than half the projected lost oil revenue.”

“These funds are often accused of being ‘pork-barrel’ to be distributed among cronies. With the projected lower oil revenue announced by the Prime Minister on Tuesday, these funds should be abolished as part of the cost saving measure.”

He asks: Why should the government distribute burdens to ordinary Malaysians in the form of GST while keeping a huge slush fund as pork barrel to be distributed to cronies?