The 1972 Budget: sales tax and gaming tax

The 1972 Budget is the most painful budget for many years. It is also in the true tradition of our Finance Minister’s past budgets – for its bias in favour of the haves and the rich, and the burdens he imposes on have-nots and the labouring class.

The 1972 budget will be particularly painful for the poor, and comparatively painless for the rich. In fact, the Finance Minister went out of his way in his budget speech to assure the rich and the wealthy that there will be no income tax changes to get the rich to make a greater contribution to national revenue. He is particularly tender to his own kind.

This is why after the Finance Minister’s budget address last Thursday, we saw the rich wreathed in smiles, while the poor furrowed with anxiety.

The 5% Sales Tax

For this year, the Finance Minister has introduced a new-fangled tax into the country, the 5% Sales Tax, which the government estimates will yield about $84 million of additional revenue.

Of the various revenue proposals this year, the Sales Tax will be the most iniquitous tax, for it will finally have to be borne by the consumers, the labouring class, the kampong folks, and the poor.

Although the Finance Minister, Tun Tan Siew Sin, has given an assurance that essential goods will be exempted, the poor cannot escape being the hardest hit. Up to this date, we do not know what the government means by ‘essential goods’. In any event, there is bound to be price increase in an extensive range of goods. In fact, even before the introduction of the Sales Tax, the prices of a whole range of consumer goods in the market have already shot up.

I cannot but wonder whether the government is really serious when it declares inside this Chamber and outside that it is deeply concerned about the poverty, suffering and the plight of the poor, especially the poor Malays in the kampongs, and is trying to do all it can to raise their incomes and standards of living.

The 5% sales tax, for instance, cannot but reduce the incomes and standards of living of the poor Malays in the kampongs.

In the past year, the lot of the poor kampong Malays had been a very hard and bitter one. Large numbers of kampong Malays in many parts of the country have been reduced to such straits that they have only one meal a day, and that ubi kayu.

Under normal circumstances, they already find it difficult to keep body and soul together with their incomes. But in the past year, they have even less income to keep their body and soul together with the sharp fall in the price of rubber. What makes their plight even more intolerable is the devaluation of their money. With the rise in the price of essential goods and other consumer items, which characterised the past one year, they find that they can buy less with a dollar. Not only have salt, sugar, cooking oil, soap, milk, milk-powder, clothing, gone up in price, in fact the country is reaching a stage where you name it, its price has gone up.

Now with the 5% Sales Tax, leading to further overall price increases, the kampong Malays will be further driven to the wall.

Is this the way to help the poor Malays in the kampongs? By slashing their purchasing power after their incomes have plummeted because of the rubber price fall?

The poor in the kampongs, the estates, the new villages and the slums in the towns, are already groaning under the tax burdens of the government and the economic hardships of high unemployment, mass retrenchment in estates, collapse in the price of rubber and price inflation.

The 5% Sales Tax will condemn the poor, especially the kampong poor, the greater miseries and suffering.

Since the Budget address last Thursday, there is utter confusion in the market. In various parts of the country, there is scarcity of consumer goods, particularly sugar. Prices in a number of goods have gone up although the Sales Tax has not been implemented.

The Finance Minister must take full responsibility for the frustrations and confusion suffered by the consumers and the housewives during the past week. We should take steps to end the present confusion.

Last year, the Finance Minister doubled the surtax on all imports from 2% to 4%, raising the cost of living. This year, he has imposed a 5% Sales Tax.

The Finance Minister seems to have a special predilection for indirect taxation. Indirect taxation is in general a regressive form of taxation as it bears equally hard on the poorer labouring class as on the rich, and as the rich have large incomes, it is the labouring class who really feel the pinch.

This is not the way to close the gap between the haves and the have-nots, and to provide revenue for the government to finance social, economic and educational services, as it makes the poor poorer without making the rich any less rich.

Thus, the recent salary increases for government servants and private sector employees have been nullified by the further rise in the cost of living which must follow the imposition of the 5% Sales Tax. The workers are therefore justified in feeling that they have been played out by the Finance Minister.

The equitable, enlightened and progressive way to narrow the gap between the haves and the have-nots is to place greater reliance on direct taxation based on the capacity to pay, such as income, wealth, capital gains and profit tax. There is a complete absence of any attempt to get the richer class to make a greater contribution to the national revenue y increased direct taxation as, for instance, increasing the maximum rate of income tax from 50% to 70% for those earning $100,000 a year or above.

Gaming tax

Another revenue proposal is a gaming tax at the rate of 5% subject to a minimum of 5 cents on the value of the ticket or stakes to be paid by the player.

In the last few years, the Alliance government has introduced one form of gambling after another. In 1967, the government passed a law in Parliament to set up the ill-fated football pool. Now we have legalised four digits, three digits, toto, casinos, and what-have-you.

It would appear that the Alliance Party, being a party of gamblers want to turn Malaysia into a nation of gamblers.

Gambling is a social cancer and the promotion of open gambling by the government is one of the greatest disservice this government has done to the people Malaysia. For it will encourage and breed among Malaysians, particularly among the young generation, the mentality of hoping to acquire wealth and fortune without working for it.

Does the government know the number of homes broken, rice bowls destroyed and lives blighted by the government’s legalised four-digits gambling?

One thing which has been noticed recently is that the four-digits gambling is not affected by the general economic and business depression caused by the fall of rubber price. In fact, four-digits gambling seem to thrive on drop in rubber price, and the number and frequency of people from the poorer classes in the town, new villages and kampongs, seem to increase in proportion to the fall in rubber price.

This is because when rubber price drops, and the poor are desperately pressed for means to maintain themselves and their family, many resorted to the wildest fancies like hoping that they will be able to strike four-digits and have a break from their poverty, suffering and misery.

They therefore squandered away their last cents or borrowed from any quarter to have a desperate game with chance.

What I find shocking is how the government can legalise open gambling, such as the four-digit, as it is not only against the teaching of the official religion, Islam, which forbids gambling, but is a new instrument of impoverishing the poor kampong Malays.

Four digits is a curse to Malaysia. It is an even greater curse to the poor kampong Malays.

Before the government legalisation of four-digit gambling, there were illegal four digit gambling, just as there are now illegal four-digit rackets operating side by side with legal four-digits.

At that time, however, the players were confined largely to the Chinese in the towns and villagers, and very few Malays were aware or knew how to place bets, as it involved acquaintance with an illegal network.

With the legalisation of four-digits, and government’s open encouragement to the people to gamble, all Malays know how to gamble it.

We find at the four-digit gambling counters, Malays from all walks of life, especially those from the poorer strata and kampong Malays, squandering away their meagre earnings or pay packet to have a date with Luck, causing greater impoverishment and backwardness of the poor.

A government which really wants to help the poor, in particular the poor Malays, would not introduce and popularise four-digits gambling to them, as it would be the cause of their ruination and continued exploitation.

Yet, here we have an Alliance government doing precisely this. What is more, the entire four-digits gambling franchise is farmed out to an Alliance financier, Mr. Lim Chooi Seng, who is making millions from the ruination of the poor.

We know that Mr. Lim Chooi Seng is now paying out conscience money to establish his respectability by making endowments for scholarships and contributions to charitable organisations from the Four-Digits establishment, when all these money come from the sweat and toil of the poor.

If the government really wants to implement the New Economic Policy, to abolish poverty, then it should abolish legalised gambling. However, if refuses to do this, then it should run legalised gambling, like four-digits, not for the enrichment of a few, but entirely for the benefit of the poor – as devoting the entire proceeds of the four-digit to provide free text books for every poor student in Malaysia and for scholarships for the poor.

Furthermore, if it refuses to do away with legalised gambling, then the government should impose not 5% gambling tax on the player, but 20% or even 30%, so that the country can get more revenue from this source.

Parliamentary speech by DAP Member of Parliament for Bandar Melaka, Mr. Lim Kit Siang, at the Dewan Ra’ayat on the 1972 Budget on January 12, 1972