If Prime Minister Najib Abdul Razak is to be believed – and maybe he shouldn’t, as he has been making a lot of contradictory statements of late – India’s goods and services tax (GST) is at 28 percent, as opposed to Malaysia’s at six percent.
But this is akin to comparing a satellite with a drone. India has many grades of GST, of which many food products are taxed at zero percent of GST. Items taxed at 28 percent are things like ATM machines, which are bought and used by banks.
In other words, those who pay 28 percent GST are mostly those who can afford it.
The Malaysian GST, in contrast, was introduced in one go at a flat rate of six percent.
In Singapore, GST started at two percent before gradually rising to five percent over the course of several years. And the system to reclaim the GST is efficient and comprehensive, both in the island republic and at the country’s exit points.
Having collected RM39 billion in 2015, Malaysia went one up by collecting another RM42 billion in 2016. And, comfortable with this revenue, Najib has declared that the Malaysian government cannot do without GST, claiming that any suspension or abolition of the tax would cause the government to fail.
It is also important to remember that Najib promised to disclose the uses of the GST funds collected. To date, he has yet to fulfil this promise. But has he fulfilled any of his promises?
If this is true, then what happened to the RM42 billion of 1MDB? If the loss of RM42 billion can blow a hole into the finances of the Malaysian government, why didn’t Najib show more interest to recover them from the US and other jurisdictions or locations that have seized that money under suspicion of money laundering?
Najib hasn’t done a thing to correct the flaws of 1MDB, of which he was adviser and patron. Instead, he passed the buck to Malaysians, by using GST as a ploy to cover the big, gaping hole in Malaysian public finances.
More importantly, Najib has taken a loan of RM55 billion to build the slow speed, single track, East Coast Railway Link project between Kuala Lumpur and the East coast of Kelantan. All the loans are interest-free at zero percent for a mere seven years, after which there will be a 3.5 percent interest rate.
In its eighth year, if the traffic of the train does not reach the target of carrying 60 million tonnes of freight, according to KS Jomo, Malaysia will be left with the short end of the stick.
From its eighth year, the interest rate starts at 3.5 percent, and if the project fails – and it probably will – Malaysia’s loans from China will become permanent. Not forgetting that the total amount of debt just for ECRL will be more than RM100 billion.
This is why I have been reiterating that Malaysia is neither anti-American nor anti-Chinese investment. Malaysia, under Najib, has lost billions through 1MDB, imposed an onerous GST at six percent in the whole country, and will pump in ringgit – that has already dropped by more than 25 percent since 2015 – to “make America great again.” When in fact it is the Malaysian economy that is in the doldrums.
Inflation last month was quoted at a high of 3.7 percent. Given the tendency of the Malaysian government to understate the severity of actual inflation, the true figure could be three times the official figure. All in all, Najib has lost his marbles, and can hardly cohere in every economic statement.
The most obvious evidence of is this is the comparison of Malaysia and India, when in fact India’s GST was introduced to shield the poorest from the worst effects of the tax.
But Malaysia has shown that it has little regard for the poor and average consumers, and our GST hangs from our collective neck like an albatross.
RAIS HUSSIN is Bersatu supreme council member and the party’s policy and strategy bureau head.