A decent government will withdraw GST

April 15, 2014

FMT LETTER: From Rani Rasiah, via e-mail

PSM condemns the rubber stamping of the GST bill by Parliament with an unconvincing vote of 119 to 81. A decent government should withdraw the bill at least for now and work on getting a more credible outcome. For the figures do not only reflect the partisan voting trend in parliament, with 119 BN MPs in favour and 81 opposition MPs against the bill. The truth is that it more than reflects the situation on the ground where more than half of Malaysians are unaware of the actual implications of the GST.

The government may claim that it has consulted the people, but what is its idea of consultation? Bombarding people day and night for a length of time and then going on to vote on the bill without getting feedback is not consultation. It is not even education as the propaganda material mislead by lying, giving half-truths and glossing over the GST. One leaflet shows cartoon figures in a restaurant cheering the introduction of the GST!

The GST is a tax on consumers, rich and poor, employed and unemployed. The philosophy behind it is that it is only fair that all citizens pay taxes – even if the playing field is not level. The government in giving out the BR1M has acknowledged that 80% of Malaysian families need help to cope with living costs. What then is the logic in hitting them with a tax they can ill afford?

The government’s justification for implementing the GST is that 160 countries have implemented it and that it will make Malaysia more competitive by attracting FDI. It is an argument that the poorer half of Malaysians cannot connect with.

Policies formulated with the goal of attracting FDI have scarcely benefitted the people. Living and working conditions for more than half the Malaysian population have actually deteriorated after Malaysia’s adoption of neo-liberal policies. Privatisation of what should be non-business goods such as electricity and telecommunications, and education and healthcare, promised efficiency and cost reduction but in truth have pushed prices up.

Left to market forces, housing is now out of the reach of blue collar workers. Wages meanwhile remain stagnant and unrealistically low, job security and bargaining power are at an all-time low thanks to the indiscriminate import of migrant workers. The workday has gone back to 12 hours. What’s the case for another assault?

The government has given the assurance that 1/3rd of goods will be GST exempted and another 1/3rd zero-rated, and that the GST will be imposed on only 1/3rd of goods and services. How long will this formula last? Remember how subsidies were withdrawn, not because workers’ incomes have risen to meet living costs – but on the grounds that we have been subsidised for too long? The GST rate of 6% can go up too, as has happened elsewhere.

The passing of the GST is a step backward in the lives of ordinary Malaysians simply because it will further diminish household income. As a policy it is regressive as it shifts the burden of tax from the haves to the have-nots. Company taxes will be lowered and the GST will be introduced to make up for the drop in revenue. PSM opposes the manner in which the GST Act has been pushed through and calls for protests against it. Withdraw the GST!

The writer is a central committee member, Parti Sosialis Malaysia (PSM)