The switch to the Sales and Services Tax (SST) will generate a significantly reduced revenue for the government.
Unless there are efforts to reverse this by increasing rates and expanding coverage, broadening the tax base, or even increasing corporate and personal taxes, the resulting cutbacks and austerity measures in response to reduced spending levels, may result in the elderly population being vulnerable to fewer government programmes or social support infrastructures being supported through public funds.
By 2030, it is estimated that 15 percent of the Malaysian population will be classified as senior citizens above the age of 60.
Most would have reached retirement age, no longer be working and would very likely have stopped paying income tax. Malaysia has already been deemed a country which is ill-prepared to deal with an ageing population, so this development puts the ageing population at risk.
Malaysians are living longer. Decreasing death rates coupled with birth and fertility rates which are not increasing, escalating healthcare costs, a shrinking productive workforce and an infrastructure which is more favourable to those who are younger and contributing to the economy, make meeting the financial and social service burdens of the growing numbers of senior citizens a daunting task.
Combined with the possibility of reduced or even withdrawal of funding for long-term care and support, it represents a demographic crisis in the making.
Social security safety nets, welfare systems and pension funds will be significantly stretched and overtaxed. These demands will only grow greater as the years go by. We seem to not have a long-term sustainable plan on how we are going to fund them.
The challenges of caring for the ageing population in Malaysia must involve:
- development of financing and insurance systems for long-term care that are better than the ones currently in use
- harnessing developments in medicine and healthcare services to keep senior citizens healthy and active as long as possible
- changing the organisation of community services to ensure that care is more accessible and affordable
- and challenging stereotypes and prejudices facing the aged population
This move by the government might result in the reinforcing of stereotypes and existing prejudices where the younger generation see senior citizens as more of a burden to society rather than contributing members.
AZRUL MOHD KHALIB is chief executive of the Galen Centre for Health and Social Policy, an independent public policy research and advocacy organisation based in Malaysia.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
