1974 Budget – A widespread disappointment

Press Statement by DAP Secretary-General & Member of Parliament for Bandar Melaka, Mr. Lim Kit Siang on 6th December 1973

1974 Budget – A widespread disappointment

It is a matter of widespread disappointment that the Finance Minister, Tun Tan Siew Sin, did not have the political will or courage to abolish the Sales Tax and surtax on imports as the main government weapons to fight inflation in the country.

The Sales Tax and the surtax must take the blame for the galloping inflation in Malaysia, which in 1973, see prices skyrocketing by 10% according to government estimates. This is a conservative government figure, and the reality must be very much higher.

So long as the Sales Tax and surtax on imports are allowed to remain intact, it is unlikely that the government would be able to effectively bring down the prices of all items. This is why the announcement yesterday in the Budget presentation of the abolition of import duty of 33 food and non-food items will not appreciably bring down prices to make cheap food and reasonable cost of living a reality for Malaysians in 1974.

When the Sales Tax was originally introduced in 1972, the Finance Minister said it was to bring in $84 million revenue. In 1973, the Sales Tax is expected to extract thrice that amount, as it is estimated to net for the government $210 million.

The removal and abolition of Sales Tax is not merely a question of reducing taxation, but of removing one of the causes of inflation.

Malaysia has been blessed with boom prices for her export commodities, enabling her to exceed her original revenue estimates from export duties. Thus, in the case of rubber, because of her boom prices this year estimated to average 157 cents per kilo for RSS No. 1, rubber duty is estimated to exceed the budget estimate by $129 million.

The Malaysian government can well afford to offset this gain from export duties by abolishing the highly inflationary Sales Tax and increasing the level of direct taxation on the high income groups. There must be a more ruthless tearing down of tariff walls to ensure that the ordinary Malaysian housewives and workers do not continue to be exploited by monopolistic and rapacious manufacturers.