Although Dr Mara Warwick, the country director of World Bank, the Philippines, had commended Malaysia’s quality growth and its ability to achieve a high-income economy, the newly elected government should remain steadfast in its austerity measures.
The journey ahead to bring down the national debt is not only tough, but also tedious. As a cautious citizen, I have expressed my support on the implementation of the Goods and Services Tax (GST) on many occasions in the media. GST is not only an effective tax regime, but also a transparent and fair system to collect revenue for the government. The more a person consumes, the more he has to pay. Such system encourages frugality, thus reducing wastage in an effective manner.
Since it is an election pledge to reinstate the Sales and Services Tax (SST) and its implementation will take effect from Sept 1, with a two-month tax holiday, the new government has to tread carefully. Although the government should be able to cope with the shortfall of RM20 billion in reinstating SST over the next couple of years, in the long run, the compounded shortfall will worsen the national debt situation.
The government should consider a similar form of GST, much like the United Kingdom’s value added tax or VAT, with a lower tax imposition of, say four per cent, in 2020.
We shouldn’t rely too much on crude oil although the prices are on the rise lately.
Crude oil is a depleting natural resource and its prices are just too volatile to depend on as a reliable source of income to run a country efficiently.
With other subsidies to roll out in compliance with the election manifesto in the coming weeks, the new government has to find ways and means to manage the economy more efficiently and to reduce the country’s budget deficit.
May 9 was a historic day for many Malaysians. The euphoria has not subsided, but it should not be allowed to lull us into complacency, either.
PATRICK TEH
Ipoh, Perak
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