GST: Ahmad Maslan doesn’t understand economics at all

Ahmad Maslan came out guns blazing in Pematang Pauh yesterday against his critics, even including “Kesian orang tua tu” (pity the old man) in reference to Tun Dr. Mahathir Mohamad. He also hit back at Perlis Mufti Dr. Mohd Asri Zainal Abidin and Associate Professor Datuk Dr. Mohamad Agus Yusof.

Ahmad Maslan remarked that “I hope those who advise and report to Dr. Mahathir will give him the right picture. Don’t give him wrong information.”

Ahmad Maslan’s new line is that GST has brought tax rates down, such as for individual income and corporate taxes.

It is another “kurang cerdik” argument vintage of Ahmad Maslan.

While there are marginal tax cuts for income and corporate taxes, which are insignificant anyway, the fact is that majority Malaysians are BR1M recipients-which is 7.9 million in 2014 and the GST taxes them.

GST taxes everyone and the impact on the poor is even bigger due to the limited income that they have. This is why GST is regarded as a “regressive tax”, a view that Ahmad Maslan has rejected without providing any evidence suggesting otherwise.

The ultimate purpose of the GST implementation in Malaysia is for the Government to increase the level of tax revenue to reduce its deficits.

It is a classic case of “killing the golden goose” short-sightedness. As I have repeatedly said, the biggest challenge posed by the GST to Malaysian economy is not inflation, but the dampening of domestic consumption which is an important pillar of our economy.

When disposable income of ordinary Malaysians are depleted by the GST and its resultant inflation, and given that household debts are so high which means any room for manoeuvres for the families is very limited, if every household cuts back on consumption, the economy will be at a standstill.

To use an Ahmad Maslan example, when all Malaysians took the advice of Ahmad Maslan to stay home and cook, the entire food industry from the burger sellers to hawkers to pizza deliveries to restaurants will all be come to a halt.

We don’t need a propagandist at the Finance Ministry. We need sensible leaders with a holistic understanding of the economy to steer the economy through turbulent times.