Malaysians should feel more confident that their higher taxes will be spent wisely and not frittered away through diversion to corrupt and wasteful channels, says Ramon Navaratnam.
Malaysians were given good insights into our 2019 budget, which is to be announced less than a month away on 2 November.
These Budget hints, if not revelations, were made clearly by Prime Minister Dr Mahathir Mohamad and 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, the finance minister, the economic planning minister and the Bank Negara governor all clearly and unanimously provided hints about the budget in their speeches at the Malaysia: a New Dawn conference yesterday.
What are the hints for the 2019 budget strategy?
Progressive taxation system
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 minister 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. Actually, I’ve never come across a happy taxpayer, in all my years working in the Treasury!
But if the new taxes are imposed on those who can afford to pay, that is, the wealthy and the prospering, and not the middle class or the poor, I think these 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 RM1.0 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 programmes need not be unnecessarily cut back. More could be done to help poor Malaysians, pensioners and people with disabilities.
More opportunities could be provided to balance the allocation of expenditure allocations for to the poorer states in Malaysia and the many pockets of poverty in places like Sabah, Sarawak, Kelantan and Terengganu.
Sadly, even today, many communities do not have electricity, clean water and 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 low-income and poor Malaysians 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 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 prime minister’s concern for the poor was also echoed effectively by his potential successor, Anwar Ibrhaim, 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 to basic needs instead of policies based on race, which have been wrongly pursued in the implementation of the New Economic Policy (NEP) in the past.
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 caused much polarisation in our multiracial society. We should move out of these unhealthy distorted NEP practices, especially with regard to poverty eradication, and move forward as a united – not a divided – nation.
The 2019 budget 2019, the first after the new government took over, must show the way forward. We should not have more of the same ie the old issues just packaged differently. The budget must reflect the new government’s thinking and the new order.
Fair budget needed – minus the corruption
The 2019 budget must be seen to be different. It must be prudential and pro-poor, fair and equitable and aim to restructure the economy with more meritocracy and competition.
The budget must start a new ecosystem that will be fair and just and equitable to all sectors of the economy – labour, capital and the 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!
Tan Sri Ramon Navaratnam, an Aliran member, is chairman of the Center for Public Policy Studies.