Pakatan’s budget ‘no better’

Pakatan Rakyat for all its 'show' also delivered a equally inadequate shadow budget for 2013.

COMMENT

Pakatan Rakyat has presented its’ alternative budget 2013 which fails to score any better points. In fact it is a dismal one indicating that they too do not have better ways to improve the economy but are merely claiming to have one.

Let us examine the two main items in the budgets of the two coalitions:

i) Barisan Nasional budget – The expected revenue is RM208.6 billion and the projected expenditure is RM251.6 billion with a deficit of RM43 billion.

ii) Pakatan budget – The expected revenue is RM197.1 billion and the projected expenditure is RM238 billion with a deficit of RM40.9 billion.

a) Revenue

Since 1997 when Malaysia was badly hit by the financial crisis that originated from Thailand, Malaysia’s budget has been operating at a deficit .

In plain language the government’s annual revenue is insufficient to cover the cost of its expenditure.

Surely if Pakatan wants to take over the government it should work out a plan to overcome this serious recurrent financial woe.

A surplus revenue over expenditure reflects a government ability to deliver more goods and services to the people without borrowing. But this is not possible given Malaysia’s long standing economic ills since the Mahathir era.

Hence Pakatan should present a rescue budget plan to tackle the financial misfortunes of the country by tabling a budget with a much higher expected revenue than that of BN.

Malaysia is blessed with many resources and with better governance the economy should be able to recover.

Colossal illicit outflow

Many VIPs , exporters and importers are evading paying the full income tax, tariffs and duties resulting in the government losing billions of ringgit in revenue uncollected.

Every year billions in foreign currencies are transferred overseas by BN politicians, their cronies and businessmen without going through Bank Negara to evade paying income tax.

The central bank should impose better controls on the transfer of illegal funds out of the country as outflow of colossal amount of foreign currencies will have a negative impact on the economy and the ringgit value.

With better control , the IRB can then assess the value of the earnings and wealth of these people and tax them accordingly.

Based on latest reports the Chief Minister of Sarawak is tagged as the richest billionaire in Malaysia whose wealth is valued at RM45 billion qualifying him to possibly be the second richest man in South East Asia after the sultan of Brunei.

The IRB can collect billions of ringgit in income tax if the government authorizes it to go after these people.

Pakatan can step up efforts to recover the ill-gotten wealth including those stashed overseas.

For the years 2012 and 2013 the expected annual total exports and imports are valued at more than a trillion ringgit each.

Similarly had the tariffs and duties on these goods and services been paid in full based on the full declaration of their value instead of under-declared value, the past years’ revenues collected by the relevant agencies would have been be much higher.

Thus the relevant departments namely the customs and other agencies must be revamped.

Hidden earnings

For both taxes on the hidden earnings and under-declared goods the government should be able to collect another RM10-15 billion in revenue.

Therefore Pakatan should have presented an expected higher revenue say RM220 bil based on a projected expenditure of RM238 thereby reducing the deficit, debt and borrowings.

Pakatan should propose to revamp the current tax collection system to cover the loopholes.

The Budget 2013 is the last one before the 13th general election, hence Pakatan should have presented a convincing budget to win the hearts and minds of the people and to counter Najib’s psy-war budget.

However it did not seize this golden opportunity.

Pakatan is fortunate to meet an opponent whose political masters are so engrossed in their greed for power and immersed in so many ills that will lead to their own downfall.

b) Expenditure

Pakatan should ensure that all public projects and services for the year 2013 go through the open tender system to ensure the most qualified contractors with the lowest/best prices are awarded the contracts and that all contracts that are already awarded by the BN government directly to the crony companies are cancelled or reviewed .

Additionally all mega projects will be reviewed or cancelled to avoid waste of public funds. These measures will save the government billions in savings.

Cost of living

One of the effective measures to reduce the cost of living of the people is to reduce cost of borrowing.

The people need many goods and services for a living but many cannot afford to own them due to the high costs of acquiring them and hence live in poverty.

The concept of Islamic banking is the solution that enables the poor/ordinary people to acquire these necessities with minimum costs.

The present so-called Islamic banking propounded by Umno religious experts is not in accordance with the true Islamic teaching ,which is just the rebranding of the Western concept of borrowing.

In a true Islamic banking system , there are two functions –

i ) Lending is not a business and hence a Muslim cannot make profit from it. An Islamic bank shall lend money to borrowers free of interest but charges only minimum administrative costs. In these way people can borrow money to buy houses, cars, capital for businesses and pay the loan principal only plus some processing fees.

So many people can benefit from this system.The rakyat then will be freed from the burden of paying the ever growing interest charges.

The Pakatan government (if elected) can set up these banks with help from public funding .

ii) An Islamic bank can make money/profits by investing the depositors’ money and that of the shareholders in direct or joint venture investments/business activities.

Hence depositors and bank shareholders can make money through these business activities but not through loans given to borrowers . It is a win-win situation to all.

Awang Abdillah is a political analyst, writer and FMT columnist.