Budget 2016 is about the government's budget, not about the economy although it has implications for the rest of the economy.
To be fair, the strategic thrusts for the economy where already spelt out the 11MP announced earlier.
In straightening out the books of the government, the government did the following:
1. Increasing personal income tax for those earming RM600,000 a year or more by 1 and 2 percentage points. Move in the right direction.
2. There should be an increase in the corporate income tax as well, especially for big multinationals. They must contribute more to the economy.
3. I am dismayed that the government gloated at the massive amount of money they have raised and will raise from the GST. This is taxing everybody for the benefit of government revenue to pay civil servants who do a bad job in running the country and economy.
4. I am concerned that the extra GST money may have come from the reluctance of the government to refund businesses. If the government can go around to every shop and demanding GST payments and fines, the government is not thinking of fairness in implementing the GST but in collection extra revenue, by hook or by crook.
5. The minimum pay for civil servants at RM1,200 per month is a good move, being socially just though the economics is another matter althogether.
6. The move to ramp up the average speed of the internet to 20mps is a good move.
Having said that, a good budget is one that inspires investors. This budget does not do that.
3 comments:
you contradicted yourself in your last line with point 1 & 2. DUH!
Surprised those who were deft enough to take advantage of the fuel price fall in removing fuel subsidy didn't take advantage of the currency exchange rate fall to ramp up policies to attract more inbound investments.
Perhaps they have already acknowledged that the calamitous drop in intangible trust cannot be easily regained in the world. So it is just a power-consolidating budget aligned by two polarities - revenge and defense, and you can find ample examples of them from what were proposed. Such as royalty, universities, penang, sarawak, littorals, pmo, longhouses, and so on.
Certainly the double tax relief for the middle class amounts to nothing when their take-home pays have already fallen to critical levels relative to higher costs of living. Now add cooking oil and electricity bills.
So it is wise for every business to take a look at the limits of allowed deductibles beyond which switch to the alternative economy which is what will enable households to indirectly save themselves who have long been disenfranchised by a government bent on only saving itself while still dangling vision 2020 already expired even today.
Mining is out so we have only three major sectors - manufacturing, plantations and services. The first and third should be tax-free for one year and the second should be duties-levy-free for one year. Do your math and you will find the additional gst take-in's so far have already equalized the potential tax losses from letting go those quantities next year. And in doing so, those sectors will be given the life-saving spur to kick-start new activities taxable after fourteen months from today. Moreover, create job opportunities whether in the urban (services) or rural areas (manufacturing, plantations). Many of those who are still working are much stressed and battening down to hard days ahead. Which is extremely bad for business growth and therefore the banking sector. In the related plantation sector, haze has occluded sunlight and el-nino has occluded rain so the latest weather reports will proclaim no sun no rain. Without both in the right balance, trees won't fruit, workers will leave and economists will have to imagine another model again.
As for the government segment of the services sector, see the lopsided 1:5 allocation. Eighty percent opex just to run - and run badly - twenty percent devex. You want an example? We already lost rakyat money from four out of six littorals and now it is proposed to acquire another six.
What we need is not just a balanced budget for the rakyat and nation. What is the point of window-dressing for the books when people suffer real suffering and businesses fold by the dozens every day, creating an atmosphere that reeks of despair, removing the last doubts that this place is the place to be whether in person or in money?
A good budget will (a) make it easier to write the next one because good things in the next round will come out of present thoughtfulness without personal weaknesses of the architects of the budget; (b) address first foremost and last putting rakyat money to work that will move businesses, create jobs and put hard-earned money back into the hands of the peoples who work, not splattered for political mileage and corrupt practices; and (c) connect itself one to the next and so on as if in a continuous national chain that will address the key transformation which has eluded us since day one because of political corruption - the transformation of the political nature of the rakyat that has so far been only predicated on the three facets of tribalism, inequality and perception.
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Anonymous:
Thanks for reading.
Will new private investment be triggered by a drop in income tax rate(assuming future remains good for same old industries) or the creating of new prospects in new industries with new basic infrastructure and new policies?
We are arguing for a new way forward rather than flogging dead horses.
Sorry for being unclear, which usually creeps in with brief pieces.
walla:
As always, appreciated for helping with new views.
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