Najib: Subsidy reduction to ensure economic well-being

Najib: Subsidy reduction to ensure economic well-being

KUALA LUMPUR - The Government's subsidy rationalisation is needed to ensure economic sustainability and that savings from the exercise will be passed to the rakyat, said Prime Minister Datuk Seri Najib Tun Razak.

Although the Government had reduced petrol subsidy, causing the price to increase, he said the people could now understand that the funds had been channelled back to them under Budget 2015.

"In 2002, the petrol and oil subsidy was RM1.6 billion (S$626 million) per year but last year, a month's worth of subsidy alone had cost us RM2 billion. This is not sustainable," he said in his opening remarks at the 61st MCA annual general assembly yesterday.

Among the highlights of Budget 2015 were tax breaks for 300,000 indi­vidual taxpayers and higher 1Malay­sia People's Aid (BR1M) payout.

Najib said the Government needed to take the necessary measures to reduce high fiscal deficit.

"You cannot borrow money to pay for your employees' wages.

"If there is a fiscal deficit on the Government account, we will become another Greece in no time," he said.

He also defended the implementation of the Goods and Services Tax (GST), saying that the move was part of an initiatives to address the structural problem in the economy in a bid to become an advanced nation.

"Currently, our tax base is too narrow where only two million people are paying taxes from a total of 13 million in the work force.

"In other words, some of them are enjoying public services such as education, health and security, for free.

"We are trying to widen the country's tax base according to the consumption, where the more you consume, the more you pay," he said.

He said the Government had adopted the "soft landing" approach to help the rakyat cope with GST implementation including exempting RON95 from the list.

Najib, who is the Barisan Nasional chairman, also hit out at the Opposition's shadow budget that wanted to introduce the Capital Gains Tax, saying that it would create a capital flight thus affecting businesses and income.

"That is not the prescription. Capital Gains Tax is not business friendly and will not create wealth but will create a capital flight," he said.

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