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Thursday, October 19, 2017

Dr M explains why Malaysia can afford to scrap GST



Pakatan Harapan chairperson Dr Mahathir Mohamad said the reason why the Najib-administration implemented the goods and services tax (GST) was to make up for the shortfall caused by the abuse of public funds for populist policies.
He said this includes the Bantuan Rakyat 1Malaysia (BR1M) cash handouts, RM300 handouts for fishermen, RM800 for Village Development Committee (JKKK) chairpersons, sponsoring pilgrims, providing pensions for those of are ineligible, among others.
"The reasons why Prime Minister Najib Abdul Razak's government does not have enough money is because of his abuses in the management of government funds to gain popularity for himself," he said.
Mahathir added the Najib administration has increased salaries of civil servants, increased the number of civil servants to 1.6 million and set up expensive agencies such as the Performance Management and Delivery Unit (Pemandu), adding further strain to government coffers.
"All these people who financially benefit from Najib's largesse may be happy. But actually, the increases in their income benefits them very little.
"This is because the increases in their pay invariably cause a rise in the cost of living. In other words, the increase in pay does not increase the purchasing power.
"It is not how much one is paid that is important. What really matters is one's purchasing power. When cost of goods and services increases the extra income that one gets is quite meaningless," said Mahathir.
Dr M's treatment plan
To undo this huge strain, the government needs to reduce its deficit by getting rid of the belief that money can buy popularity, reducing administrative costs and recovering 1MDB money, said Mahathir.
He also promised that BR1M would be converted to unemployment benefits for the very poor, as he believed that most recipients can afford to do without BR1M.
"The actual amount of support for hardcore poor should be raised and paid every month, not once a year," he said.

As for handouts for fishermen, Mahathir said the right thing to do was to increase enforcement efforts to ensure foreign fishermen do not encroach into Malaysian waters and allowing local fishermen to earn higher incomes.
"Various other allowances to all and sundry should be revised or stopped. Pay increases for government servants should not be accompanied with inflation. There are ways of doing it.
"If the government is prudent in the management of government funds, there should be no shortages. The need for new taxes can be avoided," he said. - Mkini

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