Will Malaysia follow Singapore with GST hike?
Singapore has given solid economic reasons why it has opted for a Goods and Services Tax or GST hike.
The question is whether the Malaysia will use the same reasoning to hike the GST?
The other question is whether the GST will increase in the Budget 2019, that is this year?
The Singaporean Finance Minister Heng Swee Keat said there is the need to generate new funds due to rising expenses.
The 2018 Budget is a plan for Singapore’s future.
It also contained elements to preserve budgetary sustainability.
Singapore has increased its GST from 7 percent to 9 percent.
However, the implementation of this increase will not occur until sometime around 2021 to 2025.
Singapore has a larger than expected Budget surplus.
This raised the questions whether the GST hike was necessary.
Nevertheless, the Singapore government said it is highly unlikely that this amount of surplus would occur repeatedly.
Thus the planification for a rise in GST by 2025.
The Singapore Budget surplus was possible mainly through the Monetary Authority of Singapore (MAS) contributions.
But MAS was able to contribute a higher amount because of gains from fluctuations in the currency.
Structural factors are salient when considering future plans.
In Malaysia, the Umno is campaigning on an almost daily basis to justify the implementation of the GST.
It is using cartoons (see above) – which illustrates the cartoonic situation they are in.
It shows the government is still struggling to shrug-off the GST negation on the political stage.
Umno is sending the ‘GST cartoons’ to stake holders, the media, while spamming WhatsApp groups with the cartoons.
The campaing is to tell the masses the GST is not going away.
It is also a reminder to the people that the GST has helped Malaysia in times of crisis.
They won’t say it bailed the regime of PM Najib out in the face of the 1MDB scandal.
The Umno is telling the people that Arab countries have failed without GST.
It is also telling its crowd that the government did nothing but follow the crowd, since 180 countries has the GST.
They are also denying the fact that the GST has spiked the cost of living in Malaysia.
And in Singapore, the citizens questioned the Minister over the corresponding cost of living increase due to the GST hike.
Singaporeans are concerned with the possible increase of childcare expenses.
As a result of the hike, Mr. Heng was asked if there would be a rise in salaries as well!
In the first place the Umno skips the questions over salary rise on every turn of the circus.
Not only this is to their detriment say experts.
“It is fodder to the opposition.”
Singapore says security, infrastructure and healthcare continued to be financial priorities.
Correspondingly, because of these new sources of revenue were needed and the GST was the starting point.
“It is important to bear in mind that we are doing this for a very important purpose,” said the Minister.
Well, Malaysia too has a very important purpose to hike the GST. The government’s revenue is falling drastically.
It’s expenditure and debt contraction has risen drastically too.
These will need to funded and paid for by additional taxes.
Singapore’s government says the net investment returns contribution (NIRC) is now number one contributor to government funds.
This is higher than any collections from personal or corporate taxes.
Since 2009, NIRC’s contribution has more than doubled in size.
For FY 2018, it is expected to be S$15.9 billion.
The government can only spend as much as half of the long-term investment returns under the NIR’s framework.
Introduced in 2008, the framework began as the reserves under management by the Monetary Authority of Singapore (MAS) and GIC.
In 2015, Temasek Holdings were included.