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In Pakatan Rakyat’s Alternative Budget revealed on the 24th of October, one day before the Prime Minister” budget announcement, it stated its attempt to introduce real fiscal reforms and countercyclical fiscal strategies in light of Malaysia’s growing financial deficit and worsened debt-to-GDP ratio. Some of its reforms include tackling main issues such as wastage and leakages, overly-generous hand outs and reckless government spending. The four major thrusts the budget addressed include consolidating fiscal position and enhancing public finances, enhancing the wellbeing of therakyatand their quality of life, ensuring a more balanced, inclusive and sustainable economic development, and unleashing Malaysia’s true potential and enhancing its long term competitiveness. When proposing broad cost rationalisation programmes at ministries and government departments and agencies, the alternative budget proposes the temporary pay rise freezing among cabinet ministers and top-echelon officers, reviewing procurement such as award of government contracts to an open tender system and stricter control of subsidy bills. On prioritising expenditure, PR also stated its suggestion to suspend the National Service programme for at least a year, saying it costs the federal government more than the annual budget for the Youth and Sports Ministry and has also resulted in 22 deaths to date. PR also addressed the government’s 1Malaysia People’s Aid (BR1M) programme, stating all direct transfer payment programmes like it should be reviewed to tighten the eligibility criteria to beneficiaries. According to statistics it shared, the Household Income Survey 2012 states 2.655 million are eligible beneficiaries of the hand out, however the actual number of recipients amounted to 4.3 million.
Kuala Lumpur City Centre
Kuala Lumpur City Centre
On the introduction of the Goods and Services Tax (GST), PR acknowledged its effectiveness as a revenue generation mechanism, however the time is not yet right for it. “GST is a regressive tax whereby as a proportion of income, tax payable is higher for the lower income group than the higher income group, that is, the low- to middle- income groups will bear much higher tax burden than the rich notwithstanding the possibility of taking several remedial steps to make GST a more progressive or at least a less regressive tax,” stated the alternative budget. It also noted the possibility of GST’s abuse by the federal government as a short-cut and easy way out to increase its revenue and the possibility of the tax system becoming the major source of inflation during the first few years of its introduction. Instead of introducing the GST, PR proposes other initiatives including broadening the taxpayer base and introducing an RPGT-like capital gains tax (CGT) on gains from the sale of financial assets such as shares, bonds and other securities. As the cost of living and property prices are major concerns of Malaysians today, PR’s alternative budget also aims to tackle these issues. According to the budget breakdown, its policy for addressing escalating costs of living include, “Dismantling the system of licensing, quotas, and rent-seekers, which have contributed to keeping costs of consumer goods and services, in particular daily basic necessities and building materials, artificially high for end‐consumers while allowing inefficient manufacturers and unscrupulous traders to benefit from lack of competition.” It also mentioned that it would ensure wage and income growth keeps pace with inflation and also meets the objectives of Malaysia attaining high‐income status and raising minimum household income to RM4,000 by 2018. It plans to achieve that amount by proposing a study to introduce incentives for companies in selected industries to offer management trainee programmes to higher achievers at a monthly entry-level salary of RM4,000. PR also wants to raise the monthly minimum wage to RM1,100. On managing house prices, PR recommended “cooling” measures to contain spiralling house prices, including adjustments to the Real Property Gains Tax (RPGT) to pre-2007 levels, tighter restrictions by Bank Negara Malaysia on the amount financial institutions can lend in mortgage financings and restrictions by Bank Negara Malaysia in the form of a cap on the share of housing related debt and monthly repayments out of borrowers’ total debt and income. PR has also stayed true to its view on free education for Malaysians, stating its commitment to provide it in line with Manifesto Pakatan Harapan Rakyat. It plans to allocate RM6 billion per year to take over all PTPTN debt (RM2 billion), support 10% of the cost in public tertiary-level educational institutions (RM600 million), cost of living allowance for 500,000 students (RM2.5 billion) and a fund for private tertiary-level educational institutions (RM900 million). Pakatan Rakyat launched its Alternative Budget 2014 in Parliament, attended by PKR’s Lembah Pantai MP Nurul Izzah Anwar, DAP’s Rasah MP Anthony Loke and PAS’s Shah Alam Khalid Samad.

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