COMMENT Yesterday the government issued ahead of time a long list of exemptions of basic goods, from the goods and services tax (GST).
 
The Centre to Combat Corruption & Cronyism (C4) shares the anxiety felt by the average citizen, on the impending GST, and its potential burdensome impact it could create on the lower middle income group, said to be the category of persons that will be most affected by this new consumption based taxation system.
 
The long list of exemptions could be the clearest indication yet that the nation is not ready for the GST to be implemented, as espoused by several economists.
 
Although prices of 532 items or 56% of the 944 goods and services in the Consumer Price index basket are expected to be reduced to 4.1% vs process of 354 items expected to go up by less than 5.8%, at the most, the inflation rate is expected to project to a high of between 4-5% in 2015, a percentage considered high by Malaysian standards.

The projected reduction of prices have not been explained with a clear monitoring mechanism, so these figures may not reflect the exact costs of living endured by people on the street.
 
C4 is further concerned that with the implementation of the GST on 1 April 2015, and the ongoing simultaneous subsidy rationalization programme (SRP) especially for fuel, will have the effect of a double whammy for the low and middle income populations.
 
A detailed impact study be carried out on the GST implementation, and how wage structures can be reviewed and modified, including pumping up the annual wage growth, prior to the GST implementation.
 
The Bantuan Rakyat 1Malaysia Programme (BRIM) scheme cannot by any stretch be seen as a replacement of these much needed structural reforms.
 
Until a time when the wages are upped and income levels brought to higher levels, only then can taxation based on consumption be seen as the best way forward.
 
Big projects should be properly awarded
 
Budget 2015 lists out quite a number of big ticket infrastructure projects, under the strategy for economic growth (see chart).

C4 also recommends that clear measures on open tenders and contracts awarded on merit and not based on political connections, together with prudent fiscal management of public funds spent over these huge infrastructure projects.

This is of primary importance to make sure that budget 2015, remain within its bracket estimates, and political patronage does not rule the day; with cronies winning the handsome projects on bloated figures at the expense of the ordinary rakyat.
 
It is further recommended that a public service Ombudsman be created to monitor and track the progress of these big infra projects to monitor proper execution and implementation. Reports must be subject to public disclosure to Parliament.
 
The citizens of Malaysia must be further engaged and consulted on projects that affect them directly, get feedback on the ground and channel it back to the Ombudsman office for further investigation.
 
Quit passing the burden of fiscal governance
 
No moral, political or even religious justification, can possibly justify the rakyat sharing the burden of fiscal consolidation and adjustment.

This is especially so within the context of the endemic problem of corruption, wastage and leakage which was not been given mention at all, in the Budget speech of the Prime Minister.
 
Do we need to constantly remind the ruling regime, that Malaysia has been placed as among the world’s most corrupt country along with China, with the highest levels of bribery and corruption, according to the latest report, Asia-Pacific Fraud Survey Report Series 2013 by Ernst & Young.

The survey polled 681 executives in China, Singapore, Australia, New Zealand, Indonesia, Vietnam, Malaysia and South Korea.

About 39% of respondents said that bribery or corrupt practices happened widely in Malaysia, a figure that nearly doubles the Asia-Pacific average of 21%.
 
How unfortunate that none of these were even worthy of mention in the PM’s budget speech. So what gives Malaysia? More of the same in 2015? What strategies are there in our fiscal consolidation and governance that will address the systemic problem of corruption and giving bribes in doing business in Malaysia?

Malaysians deserve a government that places good fiscal governance as a cornerstone of its administration.


CYNTHIA GABRIEL is the executive director of C4.