April 1st is now known as GST Day, unofficially taking over the infamous April Fool Day. It’s true that it’s a historic moment in the history of Malaysia, and Najib administration should at least proudly declare it as a public holiday. People would then have more reasons to celebrate GST Day, contributing happily 6% on daily purchases towards Emperor Najib’s “G”olfing, “S”hopping and “T”ravelling piggy bank (*grin*).

 

Is GST (Government Service Tax) a good thing? Well, it depends on whom you speak to. To the government who is set to receive billions of extra dollars, obviously it’s a fabulous thing. To the consumers who are paying it, not really. Generally, GST is not a good thing to the people simply because any taxes are never good, as what former premier Mahathir had said numerous times.

But developed countries have it too – either called GST or VAT – so it shouldn’t be such a bad idea after all, right? Well, the British can claim benefits without having to work a single day in their lifetime. As for the Danes, their higher (quality) education is free. There’re unemployment benefits for the Americans. Singaporeans can comfortably send their children to Australia universities, knowing their currency exchange rate is almost the same.

 

What could the Malaysian government offer its 30 million citizens, of which 75% of its 14 million EPF contributors earn less than RM2,000 (US$540; £365; S$737) a month, in exchange for taxing 6% from GST? Absolutely nothing. Hold on, we’re not entirely honest. There’s something Najib administration can offers. New private jets for prime minister Najib and his beloved wife, Rosmah Mansor.

There will be no free education, let alone unemployment benefits in the form of free food and housing. This is rather boring and sounds rather rhetoric, but the country is as good as bankrupt, and Mahathir knew it. There’re too many debt holes to cover. Hence, Najib administration needs to replenish the coffers, lest the genius prime minister wishes the country’s international credit rating to be downgraded to “junk”.

 

With the country’s external debt (newly defined) close to US$1 trillion, thanks to PM Najib’s excessive borrowings, the estimated RM23 billion in new GST collection this year does come in handy. At least, it could be used to pay interests on the massive government debt and the 1MDB’s RM42 billion debt scandal. But if the country is not ready for GST, isn’t it a suicide mission for Najib administration to introduce it?

While GST indeed will make millions of Malaysian 6% poorer now, it’s not the end of the world. Like it or not, the Chinese-ethnic is the group who will bitch, curse and whine the most. At the end of the day, they will still spend but perhaps not as much as before. The group of people that Najib administration worries the most is the Malay-ethnic, who will make or break PM Najib’s political party UMNO’s vote-bank.

 

But Najib has some secret weapons to “kautim” (settles) the Malay Muslims, if it work. First, he has to legitimize the GST as part and parcel of Islam. That’s why he declared GST as “halal” at lightning speed on the day GST was implemented. And since it’s halal, it was hoped that “religious obedience” would do its magic. Voila, Malay Muslims, at least majority of them, would happily and willingly pay the 6% new tax.

So, it’s not true that urbanites would be hit the most while the ruralites are spared from GST. Everyone would be affected. And if there’re still highly educated urbanites, regardless of race and religion, who still support GST, do you think the ruralites “kampung folks” would vote Najib administration out in droves? Welcome to the ethnic-Malay special characteristic – a “forgiving” species. That’s why many Chinese men love to marry Malay hot chicks (*grin*).

 

Amusingly, all the government agencies are confuse about which items to be taxed and which to be exempted. The initial idea was to cast the net wide – tax everything under the sun. And if there’s a strong backlash on certain items, make it tax-exempted, otherwise continue squeezing money from the people. After all, if the people have been happily paying between 85% – 135% in taxes for cars, what is 6% GST to shout about?

In actual fact, prices have gone up at least 6-months before the April Fool day, without many consumers actually realised it. Nobody cares about reducing the price with the abolishment of the old 10% SST (sales and service tax) and adjust it with the new 6% GST. The easiest way was to maintain 10% SST and slap another 6% GST on top of practically everything. And they knew the inefficient government agencies can do nothing about it.

 

Now, there’s a tipping point, which the opposition parties hope will break while the government hopes otherwise – the inflation. For now, it’s still too early to gauge the damage that the comprehensive 6% tax will do to the consumers, urbanites or ruralites. The bigger picture is of course the domestic economy. Overall, people may spend less hence companies may pay less taxes due to lower profits.

In an unlikely scenario, this newly introduced tax is the best bet for the opposition parties to take over the federal government. Again, it depends on how well Najib administration plays the race and religion game. And we’re not talking about Peninsular Malaysia, but rather the Sabahans and Sarawakians. If needed, Oscar-winning actor Najib Razak can once again go shopping and happily shows how he found cheaper kangkung or chicken (*grin*).

 

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April 2nd, 2015 by financetwitter

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