GST Revisited & Related Stuff
My comments in bold.
Suddenly we have these truckloads of delays in these supposed reforms we are supposed to be having. Now suddenly all not on time and not necessary? Are the delays caused by election concerns - if they are then I am very disappointed, again we have a government that promises so much but still kowtow to votes, I am not saying the votes are not important, its that we have pathetic political will to push through NECESSARY reforms. When you are an effective leader, sometimes you have to make the unpopular decisions, anyway, the next elections need not be called till 2013 - there is plenty of time to do what is right, do what is pertinent, instead of pandering to the masses or fearing that the opposition will have more ammunition with these unpopular moves.
The next general election does not have to be held until 2013, but could come as early as 2011 to coincide with elections Sarawak, a government stronghold that supplies 30 of BN’s 137 lawmakers. Najib vowed last year to reform public finances in order to cut the budget deficit to 5.6 per cent of gross domestic product in 2010 from 7.4 percent of GDP in 2009 and pledged to tackle a subsidy regime that accounted for 15 per cent of all federal government spending in 2009.
The delay in GST signaled the end of meaningful fiscal reforms until after the next elections. Over the past three weeks, we also have the postponement of electricity price rises and ended plans to hike subsidised petrol prices. Now we have also effectively delayed announcing its New Economic Model (NEM) when Najib announced a two-stage rollout of the ambitious plan to turn Malaysia into a high-income nation based on innovation and creativity.We need:
a) a GST by 3Q 2010, with strict implementation and monitoring, with heavy penalties, must be vigilant - I know thats a tough ask, and implement a corresponding 2 percentage points cut in corporate and personal income tax.
b) we should still implement a hike in petrol prices according to a car's cc. No need to do the card reading, ID tracking, all that seems to be trying to enrich somebody with that kind of clumsy hardware and software. We already have a system in place, our road tax already taxes according to a car's cc - just tag an additional RM1,000 for cars 2001cc-2500cc, add RM2,000 for cars 2,501-3,000cc, above that put in RM5,000. You can tweak the figures to whatever amount you want to collect in the end. Sssooo... simple.
c) We need a tariff plan and formula that will allow electricity prices to be passed onto the users. Having said that, we will need a gradual removal of subsidy for oil, gas and electricity USED and CONSUMED by companies (not individuals) - why are we still subsiding them. There will be grave aftershocks if we pull the rug all at once, so do it with a plan: 1/3 subsidy removal from 1.1.2012, another 1/3 from 1.1.2014 and total removal from 1.1.2016 - and then watch our budget deficit problems eradicated drastically.
All of that will remove the reliance on oil royalties and our narrow tax base. You have till 2013 ... don't worry about the elections yet... do the hard stuff NOW. We need to see real political will to push these through, not sloganeering.