New taxes, subsidy removals should be introduced in stages, says Dr Wee

PETALING JAYA: The government should remove subsidies and impose new taxes in stages, rather than "pile-it-up" on the people simultaneously, says Datuk Seri Dr Wee Ka Siong.

Debunking the argument that there will not be price increases for food products as there will not be an increase in the sales and service tax (SST) on it, the MCA president said it was not true as the M40 and B40 groups will ultimately pay higher.

"This is because the operating expenditure and the tax on raw materials for food production will increase from 6% to 8%, which will result in a higher cost for end users," Dr Wee said in a Facebook video on Sunday (Jan 28).

The Ayer Hitam MP presented his argument with a simple illustration of three men - Talib (T20), Mahmud (M40) and Bob (B40).

"Talib, who is the cracker factory owner earns a salary of RM15,000 per month, Mahmud, who is his manager gets RM6,000 and Bob, a worker in the factory earns RM2,000 a month.

"While the government has announced no SST on food products, Talib will have to pay more as his cost of raw materials has increased, while Mahmud will likely lose his RON95 subsidy due to being in the M40 group and ultimately, Bob will also have to pay a higher cost for his food.

"A simple analogy is Talib's operating cost will increase, including for raw materials and utilities where he will have to raise the price of a packet of keropok from RM4.90 to RM5.30 due to an increase in SST, a simple example which fits most of such companies.

"Mahmud will incur higher petrol costs due to targetted subsidy removals which increases his cost of living and although Bob receives a petrol subsidy, he will have to pay more for goods bought online due to the Low Value Goods Tax (LVGT) of 10%.

"Thus who can say the increase in taxes and removal of subsidies will not lead to a rise in inflation?" he asked.

Dr Wee said a sudden increase in the cost of goods will lead to inflation, which cannot be avoided.

"My suggestion is let everyone breathe and increase taxes and remove subsidies in stages rather than simultaneously where people will not be able to handle the misery in such a short period.

"As such I appeal to the government to listen to the people and not to burden the rakyat unnecessarily," added Dr Wee.