GST Down

According to the AP, our government has deferred the implementation of the 4% GST for the moment. I wonder if this is a further indicator that snap elections will be called within the year. By deferring the implementation of the GST, this potential campaign issue will be diffused somewhat. There is nothing specific for the opposition to harp about except to speculate and fear-monger.

Personally, I think that this is another typically Malaysian hair-brained idea spouted by politicians before they had spent any time actually thinking it through. While the GST idea is a good one, it becomes really lame when the government has to compromise on a whole bunch of things and back-track on their original grand plan, one bit at a time.

The GST is a fairer form of tax but it will only work in a country with a healthy economy and sufficiently high income levels. We do not automagically become a high-income economy just by implementing GST. The arrow of causality needs to point the right way. If GST is to be implemented, it needs to be implemented across the board, and not have an exemption list longer than the actual taxed list. Otherwise, everything will just find its way into the exemption list sooner or later.

I am not an economist but I think that it is far more important for our government to work on raising income levels. Our salaries have stagnated for more than a decade even though our currency has been devalued by more than half during the period. We need to work on increasing the economic pie in order to make taxation a useful tool in increasing the state coffers. Otherwise, we are just exsanguinating an already dry husk.

When I start hiring people, I will not pay them our so-called market rates because I think that these rates are unjustified. The cost of living has gone up so much. Even my bowl of pan mee has gone up by 50 sen after Chinese New Year ~ a 10% increase. I subscribe to the Google practice of hiring good people, paying them well and leaving them alone. Then sit back and watch the magic happen.

But I do believe that our GE will be called within the year, plus-minus three months.

Published by

Shawn Tan

Chip Doctor, Chartered/Professional Engineer, Entrepreneur, Law Graduate.

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