IPOH: The Federation of Malaysian Manufacturers (FMM) Perak branch wants the Government to reduce or abolish GST and lower corporate and personal income tax in the 2018 Budget.
Its chairman Datuk Gan Tak Kong said there is also a need to extend capital and re-investment allowances.
“Other issues on our wish list are to increase incentives for exports, investment and automation as well as maintain the minimum wage rate.
“Lowering import tax, energy cost, utility costs and foreign worker levy must also be the focus,” he added.
Gan said steps must also be taken to stabilise the ringgit and increase SME grants or financial assistance.
Budget 2018 is scheduled to be tabled in Parliament in just over a month, specifically on Friday, October 27.
In an effort to engage the public and gauge prevailing sentiments, the prime minister had created a special website via his blog to solicit ideas and suggestions from the public for the 2018 Budget,
The feedback session has been ongoing since September 4 until the end of today, September 18.
Ideas and suggestions can be given in specific categories namely cost of living; housing and urban living; healthcare; transport and infrastructure; rural development; education; public safety and transparency; youth and sports; social welfare: OKU and disadvantaged; environment and agriculture; employment; taxation, business and finance; culture and tourism; and digital economy.
On Twitter, Prime Minister Datuk Seri Najib Razak said that the public plays an important role in the formation of the 2018 Budget and had encouraged people to visit the site to submit their ideas.
And the public did not disappoint as many have taken to the site to suggest ideas that could potentially ease the economic burdens faced by Malaysians or contribute to the development of the country as a whole.
One of the categories that many Malaysians took a particular interest in is the cost of living category as the media also highlighted some key points that caught the attention of many Malaysians namely to reduce GST, increase the eligibility of BR1M recipients and reintroduce petrol subsidy.
These suggestions are not surprising considering that many Malaysians are complaining about the rising cost of living of late. However, would the government be able to carry it out and would it actually help ease the economic burden of the people? Malaysian Digest sought to find out.
GST And BR1M Are Still Needed
Ever since it was introduced in 2015, the Goods and Services Tax (GST) was not received well by the majority of the people as they say that it contributes to the higher cost of living that they are experiencing now.
Because of this, some are calling for the GST to be reduced from 6% to 4% or lower, or to abolish the system altogether.
Prof Dr Shazali Abu Mansor, economic expert and lecturer at Universiti Malaysia Sarawak (UNIMAS) said that any attempts to remove GST would be difficult but maybe it could be offset by reducing other taxes such as income tax and road tax for small capacity cars.
“It’s difficult to change the GST because it is already in place and since it is said to be an efficient tax then we can just focus on it and look into reducing the other taxes.
“I support GST on this basis, which is to reduce other taxes, and it can also save cost on human resource as less manpower is needed to collect taxes,” he said.
But with reducing other taxes, the government would also reduce their revenue so alternative sources of income must be identified.
So in this case Shazali said that the government then needs to find a way to give the same services by increasing productivity or be more mindful in their spending e.g. looking at whether they are getting the best deal in a business dealing.
1Malaysia People’s Aid or BR1M is also an issue that is close to the heart of many Malaysians as RM5.36 billion was distributed in 2016 and helped 7.28 households to alleviate some of their economic burdens.
As people are feeling the pinch of rising cost of living, there are suggestions given on this matter that range from increasing the eligibility of the recipients and households to abolishing it altogether.
However, Nora, a financial analyst at a large government-linked company, said that while BR1M is still needed to help those who really need the assistance, it is not logical to expand its eligibility.
“Personally I find it illogical. Yes, I acknowledge that the cost of living has increased, and I also acknowledge and know that RM2,500 is the general minimum salary for fresh graduates. So if the government has the means, I think they will have to set it on a case-to-case basis.
“This means that the privilege is not applicable for everyone earning RM2,500. They will have to look into their commitments as well as average cost of living. Some of those who are earning RM2,500 can live within their salary because they are still living with their parents or they do not have many commitments,” she said while commenting that it is not fair that BR1M, which is supposed to help those who genuinely need it, is being taken advantaged of by those who fit in the brackets and use the money to support their lifestyle.
She also added that BR1M should be continued for deserving people but criticises the mentality of Malaysians that feel everyone should deserve BR1M and using ‘equality’ as justification.
“Put your political views aside and understand that BR1M is to help those in need. And if anyone argues that BR1M is sourced from taxpayer’s money, well then see it as a form of charity or alms giving.
“I think we should look at things from a charitable perspective, rather than always viewing things from a political or personal perspective,” she opined.
GST Is Not The Cause Of Higher Cost Of Living
Not a day goes by without some chatter on social media by people moaning that GST is the cause of the higher cost of living.
Mohd Ridzuan Abdullah, President of Parti Ekonomi Rakyat Malaysia (PEKIRA), which is a new party formed to fight for the increase of the economic standing of Malaysians, said that GST is not what is burdening the people as the main causes are other external factors.
“Cost of living did not increase because of GST, so it is is not really burdening the people, but it is caused by the price of goods and the income of people are no longer balanced,” he said.
Ridzuan, who is also the president of Pertubuhan Ikatan Usahawan Kecil & Sederhana Malaysia (IKHLAS), said that while the public in general might feel the pinch from GST, small and medium enterprise (SME) entrepreneurs are not likely to feel the changes.
This is because they channel the cost to the consumers but agrees that it is a better way for the government to collect taxes from them.
GST has been proven to benefit the government as they collected RM41.2 billion in 2016 and are expecting to collect RM42 billion this year.
Because of this, he believes that the probability of the government to abolish GST is slim to none but there is a chance that they might reduce the rates.
“GST cannot be abolished because the government would lose its revenue source since a lot of taxes have been abolished before but there is a possibility that the government will reduce the rate to 4%,” Ridzuan said, echoing the suggestions given by the public on the 2018 Budget site.
However, he said that a drastic decrease in GST rates to 2% or 3% is highly unlikely since it will affect the government’s revenue and said that since the GST is already in place, it is difficult to revert back.
“This is mostly about the hype stirred up by the Opposition political parties but if they wanted to oppose the GST, they should have done so before GST was implemented.
“Now they are only using it to find fault in the government and only raise the issues against it after it was implemented,” he said.
Petrol Subsidy Should Not Be Reintroduced, It Will Mostly Benefit The Wealthy
Another key point that was highlighted in the public feedback on Budget 2018 was the suggestion to reintroduce the petrol subsidy seeing that the global oil price seems to be recovering and the weekly petrol and diesel price has steadily gone up.
There are also those who suggested that the government should introduce a mechanism so that the subsidy could be enjoyed only by those who are really deserving such as embedding the information into their MyKad.
However, when we spoke with Datuk Abu Samah Bachik, petrol station operator and former president of Petrol Dealers Association Malaysia (PDAM), he said that the subsidy should not be reintroduced after the weekly managed float system was implemented.
“People wanted petrol prices to follow the market price and the government listened. But now when petrol prices are rising, they want the subsidy back. This is just taking a step back.
“In my opinion, the government should not give back the petrol subsidy and they should find another way to help the people.
“This is because when the subsidy is given, everyone regardless if they are wealthy or not, would receive it, and that is not fair because the wealthy receives more subsidy as they are using larger vehicles, which uses more petrol,” he said.
He suggested that since the GST has been in place for a few years, the government should reduce the rate as a way better way to help the people since the GST rate is supposed to be based on the economic abilities of the people.
While people are quick to point their fingers to the rising oil prices as the cause of the rising cost of goods, Abu Samah said that the people are not fair in their judgement.
“When oil prices went down five times, the prices of goods did not follow suit but now when oil prices are going up, they immediately raise the price and blame the rising price of oil as the cause,” he said.
The assumption that petrol dealers are making more profit from the rising oil prices is also not quite true because Abu Samah shared that the commission that they receive is on per litre basis which has been fixed by the government at a certain rate despite the rising oil prices.
“We are not really benefiting much with the rising oil prices because we have to pay our employees’ salary, which has increased due to minimum wage, and other utility bills.
“The people should understand what we are going through instead of assuming that we are benefiting much from the recovering oil prices,” he added.
Before we parted ways, Abu Samah advised Malaysians to be more mature in their outlook and to adjust their lifestyle according to their means instead of complaining and demanding the government to fix the perceived problem so that they can lead the lifestyle they want.
“They need to adjust their lifestyle according to their income, for example, they should use smaller cars or vehicles so that the petrol price would not eat into their expenditure but many Malaysians do not want to do this.
“The people do not understand how their demands would weigh on the government nor do they think on how to help the government. The people really need to reflect and think collectively first before demanding something from the government,” he advised.
Despite the different opinions given on the feasibility of the government to carry out the ideas given by the public, there is a chance that it would find its way in the 2018 Budget. The prime minister said that all suggestions would be looked into and studied to input into the budget.
Perhaps the one advice we can put in place in our daily lives without waiting for handouts from the government is the reminder from our stakeholders that we can always change our lifestyle based on our income so that we would not be too burdened in the current economic state.
