Thursday, October 24, 2013

GST: Najib, Do It Now ! Ask Malaysians What They Can Do For The Country

Hantu Laut

We are left far behind because of decades of government pampering a lazy and subsidy-minded population. 

Many Malaysians believe government subsidies as of entitlement rather than of charity. Unless we do it now, implement the GST, Malaysia will forever be caught in the middle income trap.

In order to maintain its competitiveness, in order to sustain long-term growth and increasing employment and getting the country to higher income level, the government must change its tax structure and its reliance from direct taxes to indirect taxes. 

Direct taxes and some indirect taxes are deemed uncompetitive as such taxes are being subjected to abuses. Cheating and evasion of income, sale and excise taxes are common among businesses in the country, resulting in massive loss of revenues. GST is the most efficient and effective way to collect taxes. Other than GST the government must also reduce all subsidies, gradually to zero level. 

The right thing to do is to increase income, not reduce the cost of goods through subsidies to please an already unproductive population. 

Malaysians compared to countries like Singapore, Hong Kong, Taiwan, South Korea and China have poorer per unit output in productivity. Higher productivity signifies a healthy and expanding economy, which have helped those countries progressed economically by leaps and bounds, leaving Malaysia behind in a stagnated middle income pool.

A slow Malaysia was fault of the government, who have been trying to please a population into keeping them in office in perpetuity. The BN government should know by now all those years of cradle coddling has backfired on them and they are likely to lose the next GE if nothing bewitching is done to appease a disconcerted and angry population.

Some critics consider GST to be a regressive tax, as the poor pay more, as percentage of their income, than the rich. It has its pros and cons, but in the longer term it will benefit the population as a whole. 

I have travelled to many much poorer countries, which have introduced GST or VAT long before Malaysia mooted the idea, which shows how out of sync we are with the rest of the world. 

To date 146 countries, including poor countries like Cambodia, Pakistan, Vietnam, Nepal, Bangladesh, Laos, India and many more, have added GST to their tax structure.

Are we worse off than these poor countries, some with per capita income of less than US$1,000.

The opposition's campaign against GST being unsuitable here on the premise that there are still plenty poor people in the country doesn't hold water. It boils down to war of nerves to demonise and further weaken a limping ship that may not make it to port.

There is no abject poverty in Malaysia compared to the many countries I have visited over the years where many families could not afford three decent meals a day and many are hapless victims of circumstances and not of their choosing. 

Malaysians have wide ranging choices and Malaysia was ready for GST a decade ago but a myopic government have failed to see its silver lining, preferring to giving subsidies instead of increasing income and standard of living of the people through higher productivity.

Najib should not heed the oppositions berating him against implementing the GST, he should introduce it in the 2014 Budget. The tax should be broad-based and should not be too high or too low. I think a starting rate between 4 to 7% will not burden the people. There will be some exemptions like export of goods, international services and other items deemed essentials and should be zero-rated, but it must still be broad-based, otherwise, it will defeat the whole purpose and objective of the GST.

As John F .Kennedy said in his inaugural speech when elected as President of the United States "My fellow Americans:ask not what your country can do for you - ask what you can do for your country"

Malaysians suck!

(The people's opposition to the GST is mainly the government fault as nothing has been done to explain to the common people the mechanic and the long term benefits of the GST. The government machinery is still fast asleep)


Purple Haze said...


It is not that the govt is fast asleep. It has been a deliberate strategy since Tun Dr M's time to chuck away transparency and thus, there is no accountability eg. direct award of projects instead of competitive tender.

So far, we have heard about GST but there has been no communication about how it is going to work OR be applied. We are all left to speculate and that is not a good move if the popularity of the incumbent govt is at risk.

Anonymous said...

malaysia is wasted on malaysian... sigh

SM said...


Yes, I actually fully agree with you. We have no other choice but to cut subsidies & introduce the GST! The Government has no other way of replinishing its coffers!

After all, we need money to replace the leakages, the waste, the corruption, the cronyism, the under the table gifts, etc that was brought in by UMNO & the BN Government ever since TDM took over & Najib multiplied by his handouts & bribes!

Before you try to compare us with Singapore, Korea & Taiwan, make sure you realize that our Government has to think & behave the way their Governments think & behave!