I don’t know about you, but I didn’t watch Najib’s Budget 2016 speech. I thought it would be too painful to listen to. Not just because of the bad news but because of the thought of what could/might have been.
For a start, contrary to mainstream business wisdom, we could have managed without the regressive goods and services tax. It is regressive because it has passed the burden of tax from the rich to the entire population, even those who are poor.
The GST is expected to raise RM27bn this year since its implementation on 1 April 2015. Compare this to the revenue foregone of RM13.8bn from the discontinued sales and services tax, as estimated by Najib last October. So that means we have stumped up almost double the amount in consumption taxes.
This RM27bn raised from GST this year is also much higher than Najib’s October 2014 forecast of RM19.4bn (RM23.2bn GST – RM3.8bn exempted items).
No wonder Malaysians are hurting.
In 2016, GST is expected to rake in RM39bn, burdening the rakyat even more. According to Najib, the discontinued sales and services tax would have raised only RM18bn, hardly enough to compensate for the drop in oil prices – or so he says. So, again this means we are coughing out more than double in consumption taxes.