The day after the 1 night stand before: the aftermath of 2013 budget

The 2013 spend and feel good budget has been read for the nation’s attention and parliament’s debate. The debate is probably useless, for the Janji Ditepati administration, chronic, habitual spending above budget is a given.  This habit is well documented
Malaysia Putrajaya asks for RM14b more to spend
UPDATED @ 12:04:39 14-06-2012
By Shannon Teoh
Jun 14, 2012
 KUALA LUMPUR, June 14 — The federal government tabled a supplementary supply Bill today, asking for RM13.8 billion more to spend this year, fuelling fears the Najib administration will not be able to rein in the deficit and breach the statutory debt ceiling.
Therefore, rather than dwelling too much in detail into a current and soon to be derailed budget, let’s project into the future base on the path Malaysians been dragged down unto for the past decade.

As reported by the Star:
 *Individual income tax rate to be reduced by 1 percentage point for each grouped annual income tax exceeding RM2,500 to RM50,000. The measure will remove 170,000 taxpayers from paying tax as well as provide savings on their tax payment.

This is a sure sign of GST coming upon us because cut in personal income tax (a.k.a. direct tax) goes hand in hand for imposing GST. Let's look at Singapore for example:
GST was implemented at a single rate of 3% on 1 April 1994, with an assurance that it would not be raised for at least five years. To cushion the impact of GST on Singaporean households, an offset package was also introduced. Simultaneously, corporate tax rate was cut by 3% to 27%, and the top marginal personal income tax rate was cut by 3% to 30%. The initial GST rate of 3% was among the lowest in the world, as the focus was not to generate substantial revenue, but to allow people to get adjusted to the tax.[4]
However, Malaysians are ready to switch to GST because most of Malaysians can't even afford personal income tax!. Also, the reasons for Singapore and Malaysia to introduce GST are not the same.

With this 2013 gula and then GST, while you save 1% on your income, almost every Ringgit and Sen you spend will be taxed at 4% or whatever eventual rate that will be levied on us hence for people living on debts, you may probably end up paying more taxes. This blogger is not part of the BN administration but his/her speculation is base on sources from within:
BN and PR should agree to GST after polls says Idris Jala
By Lee Wei Lian
March 27, 2012
KUALA LUMPUR, March 27 — The country’s two rival political coalitions should cooperate on tax reforms once the political temperature has simmered down after the upcoming general elections said Datuk Seri Idris Jala today

In Chinese, there is a saying “秋後算帳” i.e. letting someone or something off for the moment only to come back later; invoke the past and punish as such. BN administration already done that with Suqiu pleaders (whose list of request is quite in line with Wawasan 2020 and 1Malaysia, and less vocal compared to the current Chinese educationists’ voices which are deemed by Nazri to be reasonable)
I’m no hypocrite, Nazri tells MCA
Minister in the Prime Minister Department Mohamed Nazri Abdul Aziz has brushed aside the claim by MCA leaders that his support for Dong Zong’s eight-point demand for Chinese education is mere diplomatic manoeuvring.
“Of course we have to be diplomatic, we are politicians – but not in the sense that I am a hypocrite…
(er…notice the get out clause?)
For people living in vibrant night light circle, this could be called the morning after the night before situation. Once the passionate objective is achieved, time for cold showers, breakfast and business as usual.

Only this time the business as usual will be back in with a greater vengeance because this time, the cost of procurement is very much higher than before and the expected and desired returns, will have to be even greater.
The existing cosy political-economic union calls for GLC and Government initiatives to dominate economic activities. When the federal government dishes out some much, it needs to recoup.
The ubiquitous quote nowadays “GST is a mean to widen tax base” is a , borrowing Nazri’s words, diplomatic way of saying in Malaysian BN context, money collected from the people and god’s gift to Malaysia has been squandered big time and there is a great need to ask for more. Bailout with tax payers’ money, i.e. future and security.
Therefore, there is an unmistakable trend of awarding of major contracts and new government measures that ask the rakyat to contribute even more than we have already. Apart from GST, there is 1Care scheme which should resurface after its disappearance before GE

Once the pre-election cost free gula-gula (cost free to the administrators) purchased re-election, existing polices will continue hence the TOL for Lynas plant will be converted to a permanent one. Social cost laden Lynas will enjoy its 12 year tax holiday via pioneer status (note: normally pioneer status is for 5 years, extendable to another 5 years for special justifiable cases, what’s so special about a rare earth plant?)
Despite the holocaust in Japan recently, the ever optimistic BN government, in spite of vehement disapproval of rakyat yang diutamakan against Lynas, is coy and positive about our own nuclear plants.

Malaysian environmentalists and opposition leaders on Wednesday slammed the government's plan to build a nuclear power plant, calling it a risky venture and saying the country has sufficient energy output to meet future needs.
Energy Minister Peter Chin announced Tuesday the government has approved in principle a nuclear plant, which would start operating from 2021, as an efficient and cost-effective means to fuel economic growth

Energy, Green Technology and Water Minister Datuk Peter Chin’s latest comment contradicts his earlier statement that government will proceed to build two plants despite the developments in Japan, adding “government will not do it secretly without informing the public”.
Chin also said the Malaysia Nuclear Power Corporation had opened a tender to conduct a study on the location, suitability and safety of the location, type of technology and public acceptance on the proposal to international consultants.

Approval of such plants means more fat contracts awarded via direct negotiations and again the PM has to defend contractors’ credibility.
KUALA LUMPUR, Sept 27 — Prime Minister Datuk Seri Najib Razak today came to the defence of construction company George Kent, saying it had passed technical evaluation before being awarded the Ampang Line LRT extension project.
Rafizi previously pointed out that the George Kent joint venture had only received “8.7 marks out of the total 30 marks for financial evaluation”, saying that Syarikat Prasarana Negara Berhad (Prasarana), asset owner of Klang Valley’s public light rail transit (LRT) and bus services, had listed it as failing its financial evaluation

We are already seeing tell tale sign of “秋後算帳”as  the 2013 budget is  already calling for reducing subsidy for sugar. More will come. As 1MDB purchased the IPP with billions of ringgit,the cost to replace and maintain old equipment will also bring about pressure/excuse to pass the burden in the form of higher tariff to the rakyat yang diutamakan. Higher monthly electricity bill will probably more than offset the once off RM250 given to people between 21 to 30 years old or the RM500 to the old folks..
Once Pakatan Rakyat Selangor state government is ousted, the original plan for Syabas to increase water tariff by 35% applicable to all is back on track and further justifies the once off RM250 and RM500 to targeted groups as a smart short term investment.
Basic economics text book mentioned that police and armed forces are public goods and must remain in government’s hands. However, in Bolehland traffic fines can be outsourced to profit oriented private contractors and the incentive to increase fine rates to enable the contractors to advertise impressive profits are very tempting.
Already My EG is contracted to collect customs on top of road tax.

So the creative and profit orientated will probably think of more things to be outsourced while Malaysia still retain one of the highest staffed and “well bonused” civil servants in the world. We already have outsourced traffic summon collection, rubbish collection, military equipment procurement, government administrative work of collecting taxes and paying to farmers, blah blah blah…things that we expect a government to do.

Perhaps we will see private contractors for big contracts like experienced ah longs collect income tax on behalf of IRB, bounty hunters for PDRM to track down petty thieves and rapists, logistic companies for helping DBKL to toll illegal pasar malam stalls away, foreign legion to patrol the jungle border on behalf of Angkatan Tentera Malaysia….god knows what else these genius will come up for us to pay!


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