Posted on 26 December 2013 - 09:18pm
Last updated on 27 December 2013 - 08:54am
KUALA LUMPUR (Dec 26, 2013): The federal government should minimise wastage and improve efficiency to cut costs instead of raising the prices of goods and services.
Former prime minister Tun Dr Mahathir Mohamad (pix)said by paying attention to the yearly Auditor-General's Report, Putrajaya can cut wastage and reduce the cost of governance.
"Every year, the auditor-general reports on wastage through improper procedures and carelessness but usually not much is changed so as to benefit from the auditor-general's criticism," he said in his blog today.
"There is no doubt that much money can be saved if the AG's criticisms are taken seriously.
"Even changing procedures can reduce costs."
To manage its growing expenses, Mahathir suggested that the government apply the concept of "cost down" as businesses do, saying it should examine everything that it does which contributes to the costs.
"The government often wastes money because it is not too concerned about the returns on its expenditure in whatever form. If the government is interested in reducing the cost of governance, it can do so and perhaps quite substantially," he said.
Weighing in on the current debate over rising prices, Mahathir said that people can accept that the government needs more money and higher tax rates to cover the cost of development with time.
"But should the increase be as big as it says? Should the taxes and rates come all at the same time?"
He said while people understood that higher tax rates are necessary to cover the cost of development, the rise in living costs has to move in parallel with incomes earned.
The former premier said the effect of raising taxes must be carefully studied first, because taxpayers cannot suddenly come up with the money to pay the new taxes and charges.
He pointed out that lately Malaysian individuals and businesses have to come up with more money because of the many increases in cost due to government policy decisions:
>> Firstly, the increase in minimum wage to RM900. This increase cannot be limited to those earning less than RM900 as those already earning RM900 and above will also need to be paid higher wages.
With this, the costs of doing business and producing goods and services have increased and in turn the cost of living for everyone has increased.
>> Over and above this, the government decided to reduce subsidies on petroleum products. Then, the electricity charges are going to be raised by15%.
"That is a big jump. It will upset the cost of production of goods which all use electricity, some at a high percentage as contracts which had already been made will result in losses and this in turn will reduce corporate taxes on profits.
"Can't the increase be in stages, for example, 6% per year for three years or longer," he asked.
>> For the people of Kuala Lumpur, new rates, some increasing by 2000 % are to be charged.
>> In 2015, the GST (Goods and Services Tax) will replace the sales tax. Obviously the government wants to collect more than the revenue from sales tax, and this must add to the cost of goods and services.
Mahathir proposed a gradual increase in taxes as a more viable option saying that tax hikes can be done in stages.
He said the government should really examine the tax rates to be introduced.
"It will not hurt the government too much but it will gain a lot of goodwill from people. They might even remember in the next election," he added.