Posted by Alias258 > 2013-08-05 15:07 | Report Abuse

Don’t use Fitch Ratings downgrade to implement GST, says Pua Prime Minister Datuk Seri Najib Razak must not use the excuse of the Fitch Ratings’ revision of Malaysia’s outlook to negative as a reason to impose the Goods and Services Tax (GST), said the DAP’s Tony Pua (pic) today. The DAP publicity secretary warned that the government’s intention to “broaden the tax base” can only act as a temporary measure but would not solve the country’s financial woes. “The easiest way to reduce the deficit for the Government is by increasing the taxes on every person and every product in this country. “However, will such measures be just a ‘panadol’ which gives temporary relief, but fails to cure the underlying cancer in Malaysia’s public finances?” Pua wrote in a statement. His response comes after the government’s statement to Bloomberg in reply to Fitch Ratings’ downgrade. Putrajaya told the business news agency that “Malaysia remains committed to trimming the deficit to 3 per cent of gross domestic product by 2015 and won’t let state debt exceed 55 per cent of GDP”, and that “it still plans to reduce subsidies and broaden the tax base”. Fitch Ratings, one of the Big 3 global ratings agency, revised Malaysia’s outlook to negative last week. The firm said that “Malaysia’s public finances are its key rating weakness” with the government budget deficit widened due to a “19 percent rise in spending on public wages in a pre-election year”. The Petaling Jaya Utara MP voiced his concern that following the Europe financial crisis, it was obvious that countries with high GST had not escaped from bearing the brunt of the economic downturn. “If GST is a cure, then Greece would never have gone ‘bankrupt’. Spain, Ireland, Portugal and Italy would not have been in financial crisis. The standard GST or value-added tax (VAT) rate in Greece is 23 percent. It is the same for Spain, Ireland, Portugal while it is 21 percent for Italy.” Pua called for Najib, who is also the Finance Minister, to not “punish Malaysians with a GST for the wastages, leakages and corruption”, especially when 85 percent of the people “still do not earn enough to qualify to pay income taxes today”. He said that the country’s natural resources should indicate that there is an “annual record surpluses instead of suffering from a persistent budget deficit”. Pua also quoted former Prime Minister Tun Dr Mahathir by saying that Petronas, the government-owned oil and gas firm, has contributed up to RM426 billion as at 2009. The sum, according to Pua, would have increased by another RM260 billion since. Citing the government’s revenue increase from RM93 billion in 2003 to RM209 billion in 2013, Pua questioned why the government has failed to get out of the deficit rut despite documenting economic growth. “If the Government continues to spend wastefully, run inefficiently and be embroiled in the cancer of cronyism and corruption, then no amount of taxes raised from the man-in-the-street will be able to prevent Malaysia from plunging into a crisis sooner or later,” the Oxford economics graduate cautioned. “Instead of the GST becoming the ‘reform’ measure, the attempt to broaden the tax base in will fact become the hindrance to the much needed real reforms of reducing the reliance of off-balance sheet financing or contingent liabilities, enforcing open and competitive tenders for all government procurement and privatisation contracts, as well as to increase transparency at all levels of the government’s budgeting processes to fight corruption.” – August 5, 2013. http://www.malaysiaedition.net/dont-use-fitch-ratings-downgrade-to-implement-gst-says-pua/