Malaysia Budget Blues

It's that time of the year again, the announcement of the Malaysia Government Annual Budget. This time it is one of those slightly special Budget announcement, as it is the maiden Budget of PM Datuk Seri Najib. However, as usual, do expect to hear a lot of rhetoric and praises from sycophants. And without fail, the "special" occasion turns out to be quite ordinary.

As expected, the media (read Government mouth piece) is filled with many praises and empty rhetoric, like the people budget, or that this is a budget that gear Malaysia towards a high income economy etc etc...

But on closer examinations, there are nothing really new in the budget. It's all same old same old infrastructure development which only benefits developers that have connections with the ruling elites. In fact, there are more bad news than good ones.

The Goods, Sales and Service Tax (GST) is coming. This is bad news, this would means that everyone would be taxed, regardless if you were earning a living or begging for a living. If GST is introduced, the poor would get poorer. Personally I am against the implementation of GST, as it only works to widen the government tax base, in layman terms, collect taxes from more people. GST is a bad tax as it betrays the original intention of taxes, that is to even out wealth distribution in a country. The intention of the first modern tax collected was to collect money from the riches and redistribute the money to benefits the poor. GST done nothing of that sorts. The introduction of GST is in no way would push Malaysia towards a High income economy, it would only burden the poor and forces more people to pay tax.

One of the key ingredient of high income economy is human resource development i.e. education. Malaysia education system is seriously handicapped by BN's New Economy Policy. The racist NEP have costs Malaysia much. The most obvious is the falling standards of Malaysia local universities and also the falling employ ability of the university graduates. These have created another vicious negative cycle: the government is forced to absorb these unemployable graduates into the public sector. Making the bloated civil servants even more bloated, hence costing the government an even higher operating expenditures. In this budget, the government is spending RM 138.3 billion to run the country comparing to only RM 53.2 billion for development. The operating expenditure would continues to grow if the government does nothing to reverse the trend.

What makes me very sick is that out of the RM 138.3 billions operating expenditure, many billions would be lost to corruptions. Every year the Public Accounts Committee (PAC) would report the blatant abuses in government spending. And yet nothing is done to address the problem. In fact, base on the PAC reports, corruptions is so bad in Malaysia that, it is safe to predict that the budget is going to overrun by as least 33%. In other words, expect the government to spend RM 184 billions instead of RM 138.3 billions by the end of 2010 for "operating expenditure". With such blatant mismanagement, the citizen would only suffer as the government would have to find more ways to tax us.

Then I do not know how the government have the chick to call this the people's budget, when GST is introduced, the government is going to make living even harder for the people. Yes, there is the raising of the personal tax relief from RM 8,000 to RM 9,000, but this would only be translated to an extra of maximum RM1,000 x 26% = RM 260 per year or RM 0.71 per day. Not even enough for a teh tarik. And that's for the highest income tax bracket. Then this "grand" relief has to be offset by the credit card tax. I have asked around, on average, Working Malaysian executives are owning 2 credit cards, that's RM 100 per year gone. So that's left RM 160 per year extra money if you are earning RM 100,000 per year. For those lower income earner, tough luck.