1. I believe the artificial euphoria after Malaysian Budget 2010 announcement has finally settled. The ritualistic annual event followed by the ritualistic media reaction and selective public interview that followed every budget announcement has not left any long term impact on Malaysian.
2. Those who are concerned now realized that it was merely a publicity stunt and we are living in a real world surrounded by fantasy that was created by the government. I wonder how many men in the street really know how bad the budget would be for them. My own assessment is that the 2010 budget lacks imagination and creativity. It is not addressing the focus issue at stake which is the rakyat.
3. It is not addressing the need to ensure that the Malaysian purchasing power stays strong. Instead it is doing the reverse. One such example is the government plan to remove all fuel subsidies in 2010. Let us look at some of the areas of the budget. Since the scope of the Malaysian budget is too wide for me to comment. Therefore, my view will cover certain areas only.
4. Firstly, I welcome the annual fee credit card charge of RM50 per credit card. Malaysian has just too many cards and they are just creating a lot of debt. Many Malaysians survives their day on borrowings. We must ask accept that Malaysians has become too dependent on credit card because cost of living has gone up, our value of currency has gone down and the income growth has not been comparable.
5. Most family budget shows a monthly deficit. We are in what we are today, because the government has failed to keep cost down and improve the wealth of the average Malaysian. Whether we like it or not, Malaysian needs to try to live within their means. If they can’t, then they must blame those who created the problem for them. They should have no more than 1 card. As such, exemption should be given for the first card because, most people now uses card for daily transactions.
6. I was appalled with the idea of setting up 1-Malaysia clinics. Health services are the responsibility of Ministry of Health. They have been setting up hospitals and clinics on regular basis. I believe they will continue to do so base on their planning. The government primary feeder clinic and secondary centers need serious upgrading in terms of manpower, quality and service. It does not need a new signboard that says “Klinik 1-Malaysia” This is a sheer waste of public funds.
7. I have written before about the impact of oil fluctuation. In Malaysia, when petrol goes up by 10 sen; everything goes up by 10 sen a kilo, a can or a piece or a glass. I think everyone knows what I meant. The government will shout and says that businessman should not be too greedy and government will control. In actual fact they don’t and do not have the ability to do so.
8. We live in a country where whenever the oil price goes up, everything goes up but when oil went down, everything stays the same. Oil is the base of all cost and the moment oil price goes up, Malaysian will not only be burden with fuel increase but with everything that sits on the shelves in the supermarket. If subsidy is removed, I believe Malaysian lower middle income will fall under the poverty line. Bread winners may have to end up doing two or three jobs.
9. I expect the government to find measures to stabilize the pump price. They should develop an “Oil Stabilization Fund” (OSF). This fund will be used to pay the fuel subsidy. In the event that the world oil price drops, then excess income from petrol sales will go into this fund. The point I am making is that, we need to have a stable petrol price. OSF is one way of doing it as with instability of oil price it will create more hardship for the people.
10. The government has also shown very little creativity in improving the nation income and its expenditure. Its revenue is too dependent on fixed salary income earners, business taxes and GLC dividends. The fixed salary income earners is the one that the government knows cannot cheat on their income and the government continues to milk them every year despite the shrinking numbers of middle income earners.
11. My assessment shows that a family 4 living in major city would be struggling with annual chargeable income from RM2501 to RM 42,000 a year (or below RM3, 500.00 a month). This group tax rate varies from 1% to 12% or from RM25 onwards. Is our government so hard up that they need to collect RM25 from the lowest rung of the society? I think the cost of doing the collection and maintenance of the accounts is higher than the collection. In my opinion, those with chargeable income of below RM3500 a month should not be paying any income tax. There is just too much hassle in the collection and maintenance of this collection.
12. Instead we see that the government reduces the income tax of those groups with taxable earning of RM250, 000 and above. It appears those who earn more than that like RM 1 million a year will be laughing to the bank. The 1% is equivalent to RM 10,000 a year. This group will use the money and go and spent it overseas. The RM10, 000 is equivalent to 400 people paying RM25 per year. That is why I said the government lack imagination.
13. It is to redefine the level of poverty, the lower income group, the middle and the upper income group. A new tax structure needs to be put into place. The tax structure for those with chargeable income above RM42, 000 to RM250, 000 needs to be reduced on a structured scale and several new tax brackets is created for those with chargeable earning above RM250, 000. Those earning more than RM 1 million a year need to pay a lot more. The government also needs to introduce a regime called “Tax At Source” (TAS) which is specifically targeted those in the high income bracket.
14. Among others TAS can be implemented to those who profited from stock market. In Europe the prevailing tax rate is 25% on the profit. TAS should also be aimed at those who earned on fixed deposit as only those with spare cash puts money in the FD. Some exemption can be given to retirees. Other source of TAS includes air tickets cost for international travel, tires for big cars and many more consumable items that is usually purchased by the rich. This is not equivalent to GST. The government also needs to improve its tax collection from businesses which typically under declare their income.
15. No matter how much we collect, if we do not manage our expenses appropriately, no amount of money is enough. The government needs to reduce its cost of procurements. For e.g. despite being the largest purchaser of paper and ball point pens, we are still paying more than what a person would be paying for buying 1 unit of such item at the hypermarket. I shall not dwell into the excessive commission that involves major government procurement because it is well documented on the public domain.
16. My conclusion of this budget is that it is making Malaysian poorer. It is squeezing the lower and middle income group. It does not address the core issue of improving the quality of life of Malaysians. The rich and superrich will ends saving more money with their 1% tax reduction. I don’t understand this government that says peoples first.
Reference
Malaysian Medical Association comment on 2010 budget allocation for the health care sector
