Govt provides indirect, hidden subsidies – Najib

PUTRAJAYA: Prime Minister Datuk Seri Najib Tun Razak says the government has provided numerous indirect and hidden subsidies in various areas that people are not aware of.

“In fact, there were a lot of hidden subsidies given in terms of healthcare, high education and tariffs which the government did not get any credit for,” he said during a briefing with editors here yesterday.

Also present were Second Finance Minister Datuk Seri Johari Ghani and Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar.

Najib will table Budget 2018 in Dewan Rakyat today.

For example, he said, about RM24 billion has been set aside for the healthcare sector when only RM600 million were collected from providing such services while the country’s electricity tariff was among the lowest in the world because of the gas subsidy.

In fact, he pointed out that the people had even benefitted from the reduction in corporate and personal income taxes with the introduction of the Goods and Services Tax (GST).

On the opposition’s proposal to bring back the Sales and Services Tax (SST) to replace the GST in its  Alternative Budget, Najib said, the GST has drastically reduced the number of people and companies that were able to evade taxes under the previous SST and has helped reduce the size of the ‘black economy’.

Najib pointed out that the courage to introduce the GST as well as rationalisation in subsidy has enabled the country to be rated ‘A-’ with a stable outlook by rating agencies when they have downgraded the outlook of many other countries.

Replying to a question on the much lower corporate tax in Singapore compared to Malaysia, he said, the costs of doing business in the republic were high and as such, many international firms were keen to transfer their operations to Malaysia where the costs were lower.

Touching on the 2018 Budget, he said, the calculation would be premised on the assumption of an average crude oil price of US$50 (US$1 = RM4.23) per barrel as compared to US$45 for the 2017 Budget and that the fiscal deficit will be slightly reduced from the 3.0 per cent expected for 2017.

Najib said that the issue of the cost of living has been overplayed.

Nevertheless, he said, the Budget will address and include many measures to deal with this issue.

The Budget will also include products and initiatives connected with the National Transformation 2050 and at the same time, reflects the aspiration of the rakyat based on the series of dialogue.

However, there is a limit to what the government can do as every measures had to be accounted for.

“There is no such thing as a free lunch, everything have to be accounted for in order to support the measures.

“For example, if you want free higher education, you have to pay in terms  of higher income tax. All the countries that adopted free higher education, their tax rates are 45 to 50 per cent. So which one do you want? You have to make a choice,” he said.

He said the opposition was making promises that could not be delivered in wanting to give free education and restructuring the National Higher Education Fund Corporation loans which stood at RM40 billion.

On the declining development expenditure in the Budget allocation, he said, the government could not keep on pump-priming the economy as it has to keep down the deficit.

However, he said, the Budget would be mildly expansionary with a number of programmes but within the government’s affordability.

He said the government’s transformation has also resulted in the private sector now becoming the engine of growth, accounting for two thirds of the investment compared to the public sector.

True to that, Najib also said that founder/executive chairman of Alibaba Group, Jack Ma, would  be in Malaysia on Nov 3, 2017 at the opening of the Digital Free Trade Zone which would provide physical and virtual zones to facilitate small and medium enterprises to capitalise on growth of the Internet economy and cross-border e-Commerce activities. — Bernama