Nuffnang Add

Wednesday, November 20, 2013

Proactive move to ensure fiscal stability

Publication: NST
Date of publication: Nov 20, 2013
Section heading: Main Section
Page number: 018
Byline / Author: By Patrick Teh

THE proposed Goods and Services Tax (GST) is not only an effective broad-based consumption tax but also an effective system that could curb wastage, especially among the affluent. The more you consume, the more you need to pay.

GST will be implemented at a rate of six per cent on April 1, 2015. Revenue from the existing sales and service tax, set at 10 per cent and six per cent, respectively, will be terminated.

A responsible government has to be far-sighted and proactive in managing its economy. We do not want our country to suffer an economic fallout, like the debt crisis that erupted in Greece in 2010.

As expected, the International Monetary Fund (IMF) had to structure a rescue package to bail Greece out so as to curtail its contagious effect.

Major reforms and austerity measures had to be implemented by the Greek government to comply with the bailout terms in order to restore the economy.

The crisis caused prolonged high unemployment, causing great suffering to the nation.

Many had to pawn their valuables just to ensure that they had enough food for their families.

Malaysia's economic outlook was downgraded by Fitch recently due to its high public debt level, which stood at 53 per cent of gross domestic product at the end of last year.

This downgrade was a wake-up call that prompted the government to take proactive measures to arrest the unhealthy debt level.

Any prolonged delay to implement fiscal policies to reduce the debt level would only bring us closer to another downgrade.

A second downgrade must be avoided, otherwise, it may trigger an undesirable impact on our stock market before it spills over to the overall economy.

As the next general election is still far away, perhaps the government should consider reducing subsidies on electricity and increase the water tariff to curb wastage.

Many low-income earners in my neighbourhood use more than one air-conditioning unit at home.

Many of them also use more than 50 cubic metres of water a month.

On average, a family of four should consume around 20 cubic metres of water monthly. Unfortunately, many of these families tend to consume twice the volume.

The government has a responsibility to lead the nation to a higher level of economic success, but at the same time, it must not overlook inculcating good habits among its people in reducing wastage.

Malaysians need to be educated to appreciate and consume natural resources, i.e. fuel, electricity and water, wisely. This is not only important in reducing wastes but also in cutting down carbon emissions.

The generous subsidies enjoyed by Malaysians for the past many decades have to be curtailed, otherwise, our economy may take a tumble, causing untold sufferings to the nation.

Let's not forget that the heavy subsidy bill has been financed by our crude oil revenues.

How much longer can our depleting oil reserves be able to foot a bill that costs billions annually?

Patrick Teh, Ipoh, Perak

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