Will we be burdened with more taxes?

The government promises that the revised budget will deliver, but like its recent promises, this too may be broken.

In recalibrating the budget to reckon with the plunge in the oil price, is the government really making a “good move,” as former PM Mahathir Mohamad has so enthusiastically put it?

Perhaps a more sober reaction would be to say that it’s a “necessary” move. It’s necessary because the government, in tabling the original budget for 2016 last October, chose to ignore expert predictions that the price of oil would keep on tumbling. If it had planned better, the Najib administration would have saved itself the trouble of revising the budget.

In any case, what people are concerned with right now is how the country’s finances will be reallocated.

All we know so far is what we’ve heard in the vague pronouncements coming from the likes of Minister in the Prime Minister’s Department Abdul Wahid Omar. He said the budget must meet the rakyat’s expectations. If that’s not a tautology, it’s got to be something close to it. However, he did elaborate, saying the administration had decided to focus on issues like the rising cost of living, unemployment, and private sector growth.

This has all been painted in broad brush strokes, but the devil, as they say, is in the details.

Attempts to handle these issues will require money, and since Petronas has announced that it’ll be cutting dividends to the government by nearly 40%, the administration will have significantly less money to work with. Where is it going to get the funds to do whatever it must to “meet the rakyat’s expectations”?

As if to answer that question, Abdul Wahid was quoted by a BN-controlled newspaper as saying that the government would manage fiscal and monetary policies towards enhancing its revenue and optimising development and operating expenditures. And the Secretary-General of the Treasury, Mohd Irwan Serigar Abdullah, said there would be “more efficient national revenue collection.”

What must be understood about the nature of government is that it is not a business, in the sense that it does not generate its own revenue. It runs on public money to sustain itself and cover its costs. Usually, the funds are collected in the form of taxes.
Of course, the government can generate revenue in other ways, but even these depend on channelling public funds into national investment arms and sovereign funds. Considering 1MDB’s track record, pinning our hopes on these companies is probably not recommended.

And while there have been promises that the Goods and Services Tax will not be raised, that doesn’t mean other taxes are off limits. So does this mean that more taxes are on the horizon?

It won’t be the most popular move by the Najib administration, but a desperate man is capable of many things, though cutting the salaries of a bloated civil service is likely out of the question, since the government needs the votes of civil servants.

No news has come of government expenditure being cut, only of “optimising and restructuring public expenditure,” according to Mohd Irwan. Abdul Wahid’s statement about “optimising development and operating expenditures” doesn’t clarify matters any further.

When public expenditure is restructured, which kind of expenditure will see more cuts and fewer reallocations: development or operating?

Judging by how scholarship money (development) has run dry though government office budgets (operating) have been increased, the answer seems obvious. Government officials may speak of “people first, performance now” and a “people’s economy” agenda, but which people are they talking about? Their cronies and supporters or the average man on the street who is struggling to survive? Is the new budget going to focus on political issues that ensure their incumbency? Or will it actually focus on issues that matter to the people?

Yes, the budget must meet the rakyat’s expectations, but so must leaders. And if the lack of understanding of the people’s plight – manifested in comments like “work two jobs” or “wake up early to avoid tolls” – is any indication, then Malaysians are probably in for a bumpy ride in the year ahead.