S'wak DAP: Cut GST, not EPF, to boost economy
To boost the economy, the government should cut the Goods and Services Tax (GST) rate instead of reducing employees’ contribution rate, urged Sarawak DAP.
"We call on the government to cut GST by three percent and not to cut the EPF contributors’ contribution saving rate by three percent," state party chief Chong Chien Jen said in a statement today.
This, he argues, is because cutting employee’s EPF contribution rate from the existing 11 percent to 8 percent will drastically reduce workers' savings and will be most felt by the lower middle income group when they retire.
"The reduction of 3 percent of the contribution rate today will severely affect 80 percent of the contributors’ retirement plan and livelihood, especially those belonging to the middle and lower income group," he said.
The DAP elected representative quoted a report by the CEO of the EPF board in March, 2015, that 80 percent of contributors will be living at poverty level after retirement.
The report Chong pointed out, had highlighted that out of the 14 million EPF contributors, 69 percent will have less than RM50,000 EPF savings upon retirement.
"Without any extra income, they will finish this savings within five years," he warned.
The Bandar Kuching MP said according to the EPF board, the recommended savings for contributors is RM196,800, a sum sufficient pay for a monthly expenses of RM800 for a period of 20 years.
Chong explained that this is still under the poverty income level of RM830 per month, which means that even with the recommended EPF savings, many contributors will still be living under poverty level after retirement, barring extra medical costs if they fall sick.
More worryingly, he said, the report noted that only 20 percent of EPF contributors will have this recommended amount of RM198,600, the majority having less savings than the recommended amount.
"Under the circumstances, a good government should be thinking about how to increase our retirement savings rather than how to use our savings to save the mess that it has created, in using our retirement savings to boost the present economy statistics and figures," lamented the parliamentarian.
On Thursday, Prime Minister Najib Abdul Razak announced that the mandatory employee contribution to the EPF will be reduced by three percent.
The move is being touted as a means to increase employee disposable income and potentially increase spending and boost local demand.
Critics and most workers however had only brickbats for the move which is seen as the government dipping into their future savings to pay for economic stimulus at their expense.
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