NATIONAL budgets in Malaysia are often described in euphoric terms. "People's Budget" and "Budget for All" are favourites of economists and "experts" of every other kind. The 2024 Budget is no different.
Those who stand to gain describe it as "Budget for the economy", while those who are no creatures of commerce think it to be a "Budget for inflation".
To be fair, no budget can make all Malaysians happy. Like all the budgets that have gone before, this, too, leaves some unhappy. Take the lifting of the price control of eggs.
As they are an essential ingredient in all things Malaysian, the move is really an open invitation to inflation, say some consumer associations. Eggs, they say, are one example of a food product that has an economic ripple effect.
Even prices of unrelated items will skyrocket when profiteers take advantage — this is often an argument advanced by them. Alarmists? Sometimes they are. But this time, they may have a point because of the timing of the lifting of the price control.
The cost of living crisis is still with us. Others like the Malaysian Muslim Consumers Association think it would streamline supplies. A logical conclusion given the fact that it is always the case of price-controlled eggs becoming the ones in short supply.
Datuk Dr Ameer Ali Mydin, owner of the Mydin hypermarket chain, who has been pushing for the prices of chicken and eggs to be floated, has understandably given the move a thumbs up. Floating the prices of chicken and eggs may work provided enforcement is robust. History is not on our regulators side, but we shall take the government's assurance of robust enforcement this time.
We must at least for one reason. Since February last year, subsidies on chicken and eggs have cost the government RM3.8 billion, money that a country in RM1.5 trillion debt can ill-afford. That spells opportunities foregone.
Next, consider the two per cent increase in service tax. Granted, it would bring in RM900 million new revenue, but guess what? The cost would get passed to consumers. If revenue doesn't trickle down to consumers, taxes do. As Deloitte Malaysia country tax leader Sim Kwang Gek makes it plain to this newspaper, the sales and service tax regime has a "tax-on-tax" effect and will result in higher prices.
A Malaysia of low inflation may just be slipping away. To say all this doesn't mean the 2024 Budget isn't heading the right way. It does, at least, in restoring the fiscal health of the country by moving away from subsidies. But a word of caution here. To get rid of most subsidies, if not all, requires a more fundamental change.
Poverty must be eradicated. There are still too many poor people in the country. If we take the national poverty line income of RM2,208, more than 400,000 households will be considered to be poor. If we take an average of five people per household, that means two million living below the poverty line.
They certainly need the subsidies. Ending subsidies before poverty is to put the cart before the horse. Poverty has been around for too long. Perhaps we are doing something wrong.
A change in strategy is needed. Take care of people's wealth, and the country's fiscal health will take care of itself.