I REFER to your report “PM: Have faith in govt decisions” (NST, May 12) and would like to urge Malaysians to support the government as it implements the Goods and Services Tax and other reforms under the National Transformation Programme.
Reforms are never easy and pleasant, as British Prime Minister David Cameron experienced when he introduced austerity measures after winning the general election five years ago.
His government’s tough measures turned around the British economy, making it the best performing in Europe.
With more jobs being created and the air of optimism about the future, the people voted his Conservative Party to power for another term, with a stronger majority to boot.
The British elections show that tough and unpopular measures can also win public support when they improve the economic and social wellbeing of the people.
GST is causing anxiety to lower-income groups and small businesses. The implementation problems should be sorted out within a year at most, going by the experience in other countries.
As GST takes root to become a broad-based consumption tax and price levels stabilise to ease consumer spending, it will be the primary generator of revenue by which the government can find the resources to fund its ambitious development plan to provide a comprehensive social safety net for the poor, the aged and the disabled.
The model for state welfare is Scandinavian countries. These countries impose high tax rates on their citizens to raise the revenue to fund their social security programmes to avoid creating financial stress to their economy.
Malaysia is doing the same to build a financially stable future with its fiscal reform programme, starting with the elimination of fuel subsidies, freeze on public service recruitment, the cuts on wasteful government expenditures on celebrations, travel and gifts. While expenditure cuts are important, these must be complemented with strengthening the revenue base, which is too narrow, depending only on a relatively small percentage of income tax payers, and highly reliant on Petronas dividends and tax payments, which are not a safe way of planning for the future, especially with crude oil prices declining.
The country cannot afford to compromise on fiscal stability for the sake of political gain. The GST must proceed as planned, as a retreat will have long-lasting implications on confidence in our economy.
Despite the heartaches caused by GST and 1MDB, I am confident this nation has a bright future, if we can be more patient and allow the government space to implement its fiscal and economic development programmes for making growth inclusive for all races. I believe all this will be laid out in the 11th Malaysia Plan.