Scroll down to read more about this news report.
Subscribe Now For more updated News from us.
THE 2019 Budget, the apogee of Finance Minister Lim Guan Eng’s wild year when he tables it on Friday, should unveil a pragmatic plan that intersects with equal measures, cautious anticipation, wincing (new taxes?) and, with any luck, an oasis of relief.
Still, warnings of a demanding budget were widely dispensed, condensing any smidgen of hope for consumer goodies, though in carefree and spiritual Malaysia there’s no harm in hoping and praying.
Budget previews have anticipated a multitude of conservative tax and fiscal policies propelled by growth-driven economics and public expectations, and, for the pessimists, a kick in the gut to government employees who probably won’t enjoy the customary bonus.
That aside, Malaysians are settled on a budget thrust by two markers:
Mitigate loss of purchasing power after a rough spell of economic privation; and,
Political consequences for the ruling party, the Prime Minister Tun Dr Mahathir Mohamad in particular.
Politically, this budget can’t waltz in as if it is an “Election Budget” with the giveaways of yesteryear; since there’s no general election to entice voters, the budget can be as tough as possible.
Notwithstanding a grimacing deficit and the spectre of new taxes, the government is ensnared in full recovery mode, grappling with a legacy of financial corruption, leaks, wastage and excesses.
The budget will allude to a deep-rooted salvage operation to recoup every last million allegedly filched over the years, not just from 1Malaysia Development Bhd (1MDB) but also from supposed under-the-radar profligacies that gifted “money for nothing” contracts which are believed to have systematically leached government coffers.
However, Lim has an advantage: he can end the financial plundering and derail the grand ole’ gravy train, which had doubled up as a distribution centre for political patronage.
The plugging should result in these positives:
The perdition of a zombie horde of politically-connected rent seekers who take for granted that the annual budget is partisan payback;
No repeat of the build/supply contracts worth reasonable millions but inflated by as little as a thousand per cent; and,
Funds conserved or rescued from misallocations are the opportune wriggle room to judiciously spread the allotments.
But for all the talk of a tough budget, he cannot stinge the rations on four classes of beneficiaries: the poor, the infirm, the security frontliners and the young minds hungering for a world-class education system.
Priority rationing should also be shadowed by practical incentives for industrialists and entrepreneurs, domestic and foreign, to invest, innovate and expand, and generate handsome profits for government revenue.
Interestingly, the “political patronage” and 1MDB allow the government justification to reanimate Dr Mahathir’s decades-old incantation.
The government, as Dr Mahathir intoned on many weighty occasions, cannot dole out populist budget goodies just to delight citizens, while the country burns. That is old dogma.
As the wily architect of the May 9 Barisan Nasional downfall, Dr Mahathir intimately understands the dire political consequences of bald-facedly dehydrating the Treasury.
So the Treasury may be inspired to rehydrate reserves by recalling — wait for it — the general Goods and Services Tax (GST), but before anyone screams bloody murder, give the hard-pressed minister some slack.
In perspective, the government just had to zero-rate the GST on two suppositions:
As per the Pakatan Harapan’s 14th General Election (GE14) manifesto, the six per cent compounding rate, from manufacturing to wholesale to retail, creamed monthly budgets, thus the urgent respite; but more ominously,
Its mechanism was yet another freewheeling leakage, as what the finance minister had attested, are falsified credit refunds that rerouted RM19.24 billion.
By this time, the Treasury should have identified the fissures and fixed the malfunctioning mechanism that previously allowed this outflow.
If they have to, they could introduce a nominal two per cent GST rate as originally intended (or lower) that should recompense sagging revenue.
Also, by pre-empting its compounding effects and broadening exemptions to food, utilities, amenities and medicine, it would soften hard spending.
This will be a test of government resolve, political will and courage: yes, the GST’s restoration will be naturally resented, but the irritation is temporary, only until this time next year.
For the sake of a healthy 2020 Budget, Lim should promise taxpayers a little discomfort for now, but a fair reimbursement next year with perhaps a few generous tax cuts.
Detraction aside, the nation’s finances get that needed mouth-to-mouth resuscitation and the chance to stabilise.
Source/ Reference: https://www.nst.com.my/opinion/columnists/2018/10/426751/tough-2019-budget (As at 3.11.2018)
Singaporean of Singapore will be greatly benefited by attending the next upcoming Malaysian Budget 2019 of Malaysia Seminar to be announced by Malaysian Finance Minister Lim Guan Eng on 2nd of November 2018 in Malaysian Parliament at 4 pm.