Malaysiakini Letter

Tax the wealthy but not the middle class, poor

Ramon Navaratnam  |  Published:  |  Modified:

LETTER | Malaysians were given good insights into our Budget 2019 that is to be announced less than a month away, on Nov 2 this year.

These budget hints if not revelations were made clear by our Prime Minister Dr Mahathir Mohamad and our top leaders in quite an unprecedented way, given the traditional silence before any budget Speech.

But this is a welcome policy move in raising transparency, encouraging public discussion and debate and providing encouraging opportunities for feedback to the new government directly from the rakyat.

Indeed the prime minister, finance minister, economic affairs minister the Bank Negara governor, all clearly and unanimously mentioned their budget hints, in their speeches at the at the conference on "Malaysia: a New Dawn" yesterday.

What are the hints for Budget 2019 strategy?

Firstly, The budget will introduce new taxes. So it's not going to be more of the same. Taxes will not only be incrementally raised as usual but there will be new taxes.

No one likes to be taxed and as the prime rightly expects, these taxes will be unpopular but, if I may ask, unpopular for whom?

Of course, those affected by the new taxes will be unhappy (for) actually, I've never come across a happy taxpayer, in all my years working in the Treasury.

But if the taxes are imposed on the those who can afford to pay, That is, the wealthy and the prospering, and not the middle class or the poor, then I think the new taxes for the well to do, will be welcomed and popular with the majority of Malaysians.

A more progressive tax system will be deemed as fair and equitable to most Malaysians. It will reduce the widening income disparities, provide more funds to pay our high national debt of RM1 trillion, reduce our budget deficit and help the government to continue to provide the basic needs to our society on a higher and even more sustainable basis.

Health, education, the environment, defence and security and anti-poverty policies and programs need not be unnecessarily cut back. More could be done to help the poor Malaysians and the pensioners and the handicapped.

More opportunities could be provided to balance the allocation of expenditure funds to the poorer states in Malaysia and the many pockets of poverty in places like Sabah, Sarawak, Kelantan and Terengganu.

It's sad that even today, many of our communities do not have inter alia, electricity, clean water and definitely reasonable shelter and sanitary facilities.

Hence, the wealthy who will be taxed more should feel a sense of gratitude that they will be able to help the government to enable more of our low income and poor Malaysians to enjoy a better quality of life.

As our pragmatic prime minister has repeatedly said, there is no point in having higher income per capita, when so many are struggling to live on a daily basis.

How can we have peace and stability if we do not transfer more tax income to the poor in the form of better social services and improved infrastructure in the depressed income areas of our country?

The PM's concern for the poor was also echoed effectively by his potential successor Anwar who was shocked to see the "abject poverty" in Port Dickson. Surely we can do much more to help the poor with more taxes from the rich?

Secondly, the budget strategy will probably and hopefully strongly introduce socio-economic policies and projects that are related (based on) to basic needs and not based on race as it has been wrongly pursued in the implementation of the New Economic Policy (NEP), in the long past.

Actually, the NEP has served its purpose and should be phased out soon and be replaced by a needs-based economic policy like the New Economic Model. This would be, in the best interests of promoting purposeful progress and national unity.

The way the NEP was implemented was quite divisive and had caused much polarisation in our multiracial society. We should move out of this unhealthy distorted NEP practices, especially in regard to poverty eradication and go forward as a united and not a divided nation.

Budget 2019, the first after the new government, must show the way forward. We should not have more of the same, that is the old issues, just packaged differently. Budget 2019 must reflect the new government's thinking and the new order!

Conclusion

Budget 2019 must be seen to be different. It must prudential and pro-poor, fair and equitable and aim to restructure the economy with more meritocracy and competition.

Budget 2019 must start a new ecosystem that will be fair and just and equitable to all sectors of the economy - labour, capital and entrepreneurial class.

Then we will have more enthusiasm for supporting the new budget strategy and higher taxation.

There has to be far less corruption too.

Malaysians should feel more confident that their higher taxes will be spent wisely and not frittered away through diversion to corrupt and wasteful channels.

Then both the taxpayers and the people will be Happier.


RAMON NAVARATNAM is chairperson of the Asli Centre for Public Policy Studies.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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