Don’t ‘punish Malaysians’ with GST, Pua tells Najib

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KUALA LUMPUR, Aug 5 — DAP MP Tony Pua today cautioned Prime Minister Datuk Seri Najib Razak against “punishing Malaysians” by implementing the goods and services tax (GST) as the country’s deficit and sovereign debt balloon.

This comes as global rating agency Fitch Ratings revised Malaysia’s finances outlook from “Stable” to “Negative”, noting that the country’s debt rose to 53.3 per cent of its gross domestic product (GDP) last year, and the deficit increased to 3.8 per cent of GDP.

“The question must be asked as to why is it that despite revenues increasing so ever healthily, an envy of many nations, the Barisan Nasional-led federal government has been completely helpless in getting out of the deficit rut,” the Petaling Jaya Utara MP asked in a statement.

Pua (picture) highlighted that Putrajaya’s revenue has increased from only RM93 billion in 2003 to an estimated RM209 billion in 2013, an increase of 125 per cent in just over a decade.

The revenue, Pua said, has been contributed mainly by state oil and gas company Petronas, which as at 2009 contributed up to RM426 billion to Putrajaya, and would have given RM260 billion more since then.

Despite the massive revenue, Pua claimed that Malaysia is still suffering from continuously rising deficit and debt as a result of wastage, leakages and corruption, and as such it could not be cured by imposing the GST.

Najib had stressed in a statement to financial wire Bloomberg recently that Putrajaya “still plans to reduce subsidies and broaden the tax base”, in response to the negative outlook presented by Fitch.

While Pua admitted that increasing taxes on every person and every product is the easiest way to reduce government deficit, the opposition lawmaker argued it would not solve the underlying structural rut in Malaysia’s finances.

He pointed out that high value-added taxes (VAT) in Greece, Spain, Ireland, Portugal and Italy — which are up to 23 per cent — did not save those countries from their severe financial crises.

“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,” Pua said.

According to the DAP national publicity chief, broadening the tax base will pose a hindrance to the many real structural reforms that he has suggested last week, including reducing reliance on hidden debts, and enforcing open and transparent dealings in procurements and privatisation contracts.

According to Bank Negara Malaysia, federal government debt currently stands at RM508.9 billion in the first quarter of 2013 compared to RM501.6 billion in the previous quarter.

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