Cut Subsidies, Cut Taxes, Cut Leakages

This is a sequel to my previous post, Cutting Down of Subsidies Should Be Fair to The People.

Now, to prevent anyone from saying that i am someone who only knows how to complaint and offer no solutions, here is my little ideas.

Subsidies Distort Market

Malaysian market has no doubt being hugely distorted by the mechanism of subsidies. This in turn distorted the way of life of Malaysians.

Subsidies make things cheaper than they should. And one of the very simple implication is that it also drive down wages.

You maybe scratching your head. Should subsidies make wages higher? Or at least enlarge the purchasing power?

No, the fact is, driving price lower by subsidies diluted the need of employers to pay higher wages. This in turn make all the savings goes to the manufacturers instead. However, many other so called "luxuries" which is not so luxurious continue to rise in price. This in effect drive down the quality of life of Malaysians.

Subsidies Distort Malaysians

I give you a real life example. Non-first-generation Felda settlers. These people should not have enjoyed any subsidies but they did, in term of pricing for their produces, discounts in raw materials etc.

And they are so luxurious that all they do is to employ foreign workers to do their work, while all they do is, well, nothing much.

This is of course a good development, except there is no drive for them to improve. How to improve when they cannot practically, or actually expand their operation?

And you ask why we got unproductive Malaysians?

The benefits of subsidies to these people, who are basically the manufacturers, does not trickle down to other Malaysians.

It in fact created another class of Malaysians all together, much like the AP system, only this time, it's for small timers, who will never stop to vote for a certain party.

Where to Start?

I would say that not all subsidies should be done away. But subsidies for non pioneer industries, profitable industries, and subsidies that do not benefits Malaysians as a whole should be done away.

Palm oil planters for example, should not have any subsidies at all.

Should then petrol subsidies be done away? Yes they should go, but only if all other vehicle related taxes are done away as well.

Price will definitely rise, even for vegetables and poultries. But market power should decide how the prices go. Government would have to let in more foreign companies and imports and force Malaysian producers and marketeers to be more efficient.

In fact, the last round of inflation due to increase in petrol price has been unjustified. The traders were the one who benefited from the petrol price increase, with the loser being the normal citizens.

So let it all the hypermarkets. Let in all kind of food imports. Let them compete. That would be a good start for everyone.

Cut Tax

Any removal of subsidies must be accompanied by tax cut. No i am not referring to personal income tax, which not many are paying anyway. I am also not referring to company income tax.

I am referring to all the incidental taxes, like import and export tax, excise tax, goods and service tax.

All this must go. Government must be fair. They cannot take away the benefits but continue to squeeze the hard earned money from the citizens. Don't bother about "buy Malaysian products". We know how good is a Proton already, thank you.

If the Malaysian products are good, we will definitely use it, like Parkson and Airasia. No need to force us to use substandard goods.

In the same breath, taxes like those charged against investment like capital market and real estate must go. Government in removing subsidies must at the same time encourage Malaysians to invest to increase their means, and not to discourage it.

The logic is very simple. You tax to have money to give subsidies. You cut the subsidies, you must cut taxes, in equal proportion.

Cut Leakage

I think this one, all Malaysians would agree. How much billions had been wasted by all the leakages, bail outs, and dubious projects?

Hence, all expenditure using rate payers' and tax payers' money must be properly documented. Any misuse must be properly punished, unlike now, where the yearly audit is just for show, and no action taken.

There must be a fair and open tender. The public must know whether the price paid for a certain project is worth it or not. If the government chose to use a higher price contractor, valid reason must be given, and not only throwing money to cronies.

Remuneration to public servant must also be revised. Are we getting the value of services we paid for? Simplest example, the Police Force. We don't need to be threatened by the ones whom salaries paid by our hard earned money. They receive the money, they should do the job. Please sack Musa. Thank you.

Conclusion

The only way to go forward in cutting subsidies is to cut taxes and leakages in the same proportion. No use to flood us with the so called facts on subsidies in main stream medias. Don't take us as a fool will ya? Everyone knows who wasted the most money, and it is not the citizens who used their rightful tax money.