PEKAN: The current mix of low taxpayer base, increasing public spending, and resistance towards subsidy rationalisation is a recipe for trouble, said Prime Minister Datuk Seri Najib Tun Razak.
Revealing that only one out of every 10 Malaysians pays tax, Najib said there is an urgent need to raise government revenue, while at the same time reining in increasing amounts spent on broad-based subsidies such as on fuel.
According to Najib, who is also the Finance Minister, the number of civil servants would increase each year, but when revenue did not rise in tandem, the country would have to resort to borrowing. In the same vein, the proposed goods and services tax (GST) was one such measure that could lead to more revenue for the government, but has been opposed by some.
“When I do not announce any bonus during the tabling of the Budget, then it is not considered a good budget. But each time bonus is dispensed, it is RM5.6bil in spending a month,” Najib said at a 1Malaysia People’s Aid (BR1M) presentation ceremony at his constituency here yesterday.
He added that subsidies had to be carefully targeted to strengthen the country’s finances.
“We say our country’s economy is mid-high income and a lot better than other countries. But the question that is on our minds is why are petrol subsidies reduced and the sugar subsidy removed when our economy is already good?
“We have to explain that the rationalisation is to avoid a situation where we have to borrow money,” said Najib, who pointed out that money saved from cutting subsidies was then channelled to more equitable ways of helping people, such as BR1M.
“A person who drives a Kancil only enjoys RM900 in subsidy a year while those with a big car can stand to benefit up to RM2,400 if they drive 50km a day. This is not fair.
“Also, why should foreigners enjoy our subsidies too? That is why we want to refine the system to become targeted, fair, transparent and efficient,” he said.
Najib added that BR1M could also help the people settle debts, and, in principle, this was also helping those in need.
“It is meritorious in Islam to help others. It is okay if the Opposition wants to denounce our efforts, as long as we hold on to the principle of helping others,” he said.