Saturday, October 26, 2013

GST: What's Not to Like?

It's been a while since I last wrote. I'm still playing catch-up with things, but the GST issue beg me to write something. I'm not an economist, but one of my expertise is in decision analysis - the basic goal is to strive for the clarity in action in any decision to make.

With regard to GST, we need to look at a larger perspective related to the long-term quality of life while also taking into consideration the government's current unhealthy fiscal conditions. Moving forward, Malaysia needs to increase its revenues. Taxing is one approach, and GST is the fairest option as it is a consumption tax - you got tax on what you consume (basic food products, public transportation, government services, etc. will not be taxed anyway).

Otherwise, this is the part most people on the street don't realize,  the government need to further cut its spending, subsidies, level of services, investments etc. that may impact general public's quality of life in the long run. You can't have cake and eat it too - you can't have both low tax and high government support at the same time.

GST, what's not to like? I might have been missing something, or it's the typical sensationalization by one faction against progressive efforts by another faction to make Malaysia a better country. For those who are truly confused, here are the keys - think long-term and get the big picture.

Why there is no GST in the U.S.? For those who are curious, IMHO, the U.S. is like 50 different countries - all states are different. 45 of them actually have sales tax, in essence similar to GST. Most states also collect income tax on top of the federal income-tax. No state income tax in some states like Texas, but there is limited state funding for education and social net to help low-income people there. Interestingly, one state, Alaska, actually give money or dividend to their residents - I could live with 24-hour daylight there in the Summer, but 24-hour darkness in winter? No, thanks.





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