GST: An embarrassment to the government, Ahmad Maslan should be moved to other ministry

Speech by DAP National Political Education Director and MP for Kluang Liew Chin Tong when opening the 1MDB scandal forum featuring MP for Petaling Jaya Utara Tony Pua in Kluang on 12th April 2015

The danger of implementing the Goods and Services Tax (GST) is not merely due to its serious inflationary impact but also the possibility of a nationwide economic recession it may trigger.

Therefore, Deputy Finance Minister Ahmad Maslan who seems clueless about GST and its impact on the people should be moved to other ministries immediately.

With his transfer, least for Putrajaya, the implementation of GST is no longer explained in terms of cheap propaganda but as something very serious.

Previously, Ahmad Maslan who is also UMNO publicity chief has been promoting a racial view on GST in his numerous ceramahs by claiming that GST is good for the Malays because the Chinese traders can now be forced to pay taxes, which they had allegedly evaded before.

This UMNO race game is also played by MCA leaders who went around telling the Chinese community that the GST can now force the Malays who have not been paying income taxes to pay tax.

Only Barisan Nasional leaders can turn our economic woes into the vulgar politics of race.

By 1st April, such racial tune has no more traction as all Malaysians regardless of race found that GST affects everyone; with majority of Malaysians suffering the sudden increase of prices.

So Ahmad Maslan had to change his tune. Now he is blaming Malaysia’s inflation – caused by the GST – on errant traders, still with a subtle racial tone.

Yesterday, Ahmad Maslan came up with a brilliant suggestion to young Malays. He told UITM students to cook for themselves to save money if they felt that prices are too high!

The students were upset – Ahmad Maslan did insult their intelligence – but were quick to retort that cooking is banned in UITM hostels. At least they managed to expose an UMNO leader who is out of touch with reality.

But what is more important is this failure of Ahmad Maslan and others in the Ministry to understand macroeconomics factors. Imposing GST on a relatively poor population when domestic consumption is the main driver of growth is a sure way to recession.

About 60% of Malaysia’s households are eligible for BR1M aid, which shows just how poor a large segment of the society that the government recognising their poverty by giving them assistance.

But they will now be taxed by GST.

The Malaysian economy used to be heavily depended on export but global export markets are weak with only the US market still doing quite well while Europe, Japan and China are in stagnation.

Since 2009, the Malaysian economy has been highly dependent on domestic consumption. When the poor and the struggling middle class are now taxed by GST, the domestic consumer market will shrink.

In this scenario, imposing GST at this stage will be akin to killing the golden goose. It would not be farfetched to imagine the worst case scenario of GST not as the feared monster of inflation, but the falling demand that precedes a recession.

For the government especially the Finance Ministry to be able to see actual macroeconomic picture, we need sensible and technocratic ministers in the ministry.

We certainly do not need a clumsy propagandist like Ahmad Maslan. He should be immediately moved out to other ministries. But I hope Putrajaya can ensure that he will not further embarrassed the government in his new posting soon.

Liew Chin Tong