I went to a student conference recently and found out how small was my world. My thought was narrowly formed by the rigid textbooks which recommends parochial one-sided views upon economic policies. I do agree that the writers do give opposite arguments for every economic issue, but one point or another is always given more weightage , stressed upon and preferred. It was unacceptable for me at first to discover how different was other people's thoughts, and they do not make sense at all.
We were discussing about the National Automotive Policy in the economic council. Imported cars were taxed up to 300 percent the original price. A Mercedes at at a hundred thousand ringgit in London is priced at three hundred thousand here. It is that way for Nissan, Toyota, Chevrolet and Honda. I explained that as a middle-income nation, with 60 percent of the population having a monthly income of less than 3 thousand, the people have to pay one third of their wages for cars alone. That is a lot of money. If they can pay less for cars, then the people would have more income at their disposal. The money can and should be used to sponsor education for the children, better nutrition , and perhaps a better house. Tax revenue of 8.1 billion from cars and APs will then be gone, but it is not lost. The people have more disposable income, and this adds strength to domestic demand.
I thought that I would be receiving major support, but I was wrong. This is the general opinion;
1. Malaysians can afford to pay the tax up to 300% , as there are a lot of BMWs and Mercs on the road.
2. The loss of tax revenue is too big and unsustainable.
3. Cheaper cars will go against the motives of public transportation, and will incur more pollution.
They tend to view this argument from a rich man's point of view, because, well, they are from rich families. I handle my own expenses alone, drive my own cars and I know how costly is the price of fuel, plus the road taxes, and there are no BMWs in my village. Our backgrounds really influence the way we view things. They never felt the overwhelming cost, because they are the 1%.
Malaysians can't afford the excessive amount of taxation. It is ridiculously high, taking one third of their income. The tax is not lost, it is reproduced in another manner; disposable income is higher. Our public transportation sucks, never efficient and causes terrible mental stress and loss of time, and it is nowhere near sustaining the public needs.
Then we spoke about subsidies. Pertaining subsidy rationalization , they wholeheartedly believe that subsidy should be reduced. Malaysians are too pampered, they said, We people are a rich bunch , they said. It seems that living in a big house with four cars really change the way you view the world. They somehow managed to stereotype Malaysians as people who cannot live without air conditioners, and everyone drives expensive cars. We were somewhat ignorant to the fact that the people's average income had stagnated for the past two decades, and is not proportional to the rate of inflation.
Reducing subsidies for fuel will spark a cost-push inflation, price of goods will rise automatically, and only the top 1% of the income group can actually sustain themselves. I mean, seriously, this is basic economics, a fixed textbook theory, can't they see it to that point?
Those men in the ministries who proposed for subsidy rationalization are the 1% percent themselves; they are the elites, they do not speak for the poor. Economists are people with high income who are unable to form a perspective from a regular citizens' point of view.
"And what Allah restored to His Messenger from the people of the towns - it is for Allah and for the Messenger and for [his] near relatives and orphans and the [stranded] traveler - so that it will not be a perpetual distribution among the rich from among you. And whatever the Messenger has given you - take; and what he has forbidden you - refrain from. And fear Allah ; indeed, Allah is severe in penalty." ( Al-Hasyr, 7)
We people don't care if the nation have an outstanding budget surplus or a behemoth GDP, they don't make sense at all to us. 5 percent growth or a high competitiveness rank have nothing to do with our lives, so them economists can either shut up or say something closer , more significant to the lives of citizens. I mean, who cares if the current interest rate is 3 percent? Why would that matter? The things that matter is the prices of sugar and salt, gas and cars. Or the fact that more than 900 billion of illegal money had been robbed away from this country from 2000 to 2008; they should focus upon that fact rather than asking the people to pay more, 'be thankful', sacrifice for a greater good, or whatever terms those government bloodsuckers use nowadays.
Rather than introducing GST and reducing subsidies, the government should really curb the overwhelming corruption, or else they must go down.
I learned one thing that is vital from Economics; the Malaysian government is full of crap.