From Wenger Khairy Blog
Total government import duties from 1985-2008 was RM 90 billion. This would include the "redistribution" of income via import tax, ( a new economic policy and by that I do not mean NEP). Total Government Operating Expenditure for the same period was RM 1.3 trillion. As a %, excise duty only matches 6% of total Government operating expenditure. This includes import duties on everything.
Total Govt. expenditure for subsidies for the same period was RM 94 billion. It may appear that indeed this new fangled approach of funding susbsidy via tax that you espouse may have some credence in that manner. A rob from the rich to feed the poorr.
Unfortunately that is only partially the story. Whilst revenues from import excise duties over the last 24 years have remained relatively constant at around RM 3.7 billion, with a standard deviation of about RM 1.2 billion , the expenditure on subsidies has grown exponentially from a low base of RM 302 million in 1985 to approximately RM 24 billion in 2008. In fact the amount of subsidies paid out for the last 5 years was RM 69 billion, wherelse the amount of import excise tax was a mere RM 11 billion.
It is quite clear that moving forward, revenue generated from import excise tax will not be able to match anywhere close the expenditure on subsidies. If this was the raison d'etre behind protectionism - i.e. tax discretionary imports to fund subsidies, its short sighted and is currently unsustainable and will continue to be unsustainable. People who subscribe to this notion espouse "opinions unsupported by fact."
Total car loans disbursed between 1996 - 2009 was RM 325 billion. The collateral for the car loans are the cars themselves, which are artificially priced higher than the international market value. So a household is forced to divert extra monetary resources to pay for cars due to the high price which is a direct effect of protectionism. This amount spent on cars does not include the amount spent for maintenance and upkeep. If consumers had the choice of high quality cars that require minimum upkeep for example if power windows, fuel sumps, engine consumption and so on was engineered to an international standard, they will not have to spend a lot of money to replace parts that breakdown frequently. It is thus quite easily conceivable that the total amount spent by households to own and maintain their private vehicle would be upwards of RM 500 billion, (furthermore the RM 325 billion is just loans taken out and excludes any cash downpayment.)
If consumers could have obtained cheaper cars, perhaps 25% less than the current market price, consumers would have saved RM 100 billion. This more than offsets the excise tax on ALL products which you are of the opinion would be used to fund subsidies.
Consumers being better off would then not require subsidies. There will be no strain on the Government budget as is the case now. Read more here:
Total government import duties from 1985-2008 was RM 90 billion. This would include the "redistribution" of income via import tax, ( a new economic policy and by that I do not mean NEP). Total Government Operating Expenditure for the same period was RM 1.3 trillion. As a %, excise duty only matches 6% of total Government operating expenditure. This includes import duties on everything.
Total Govt. expenditure for subsidies for the same period was RM 94 billion. It may appear that indeed this new fangled approach of funding susbsidy via tax that you espouse may have some credence in that manner. A rob from the rich to feed the poorr.
Unfortunately that is only partially the story. Whilst revenues from import excise duties over the last 24 years have remained relatively constant at around RM 3.7 billion, with a standard deviation of about RM 1.2 billion , the expenditure on subsidies has grown exponentially from a low base of RM 302 million in 1985 to approximately RM 24 billion in 2008. In fact the amount of subsidies paid out for the last 5 years was RM 69 billion, wherelse the amount of import excise tax was a mere RM 11 billion.
It is quite clear that moving forward, revenue generated from import excise tax will not be able to match anywhere close the expenditure on subsidies. If this was the raison d'etre behind protectionism - i.e. tax discretionary imports to fund subsidies, its short sighted and is currently unsustainable and will continue to be unsustainable. People who subscribe to this notion espouse "opinions unsupported by fact."
Total car loans disbursed between 1996 - 2009 was RM 325 billion. The collateral for the car loans are the cars themselves, which are artificially priced higher than the international market value. So a household is forced to divert extra monetary resources to pay for cars due to the high price which is a direct effect of protectionism. This amount spent on cars does not include the amount spent for maintenance and upkeep. If consumers had the choice of high quality cars that require minimum upkeep for example if power windows, fuel sumps, engine consumption and so on was engineered to an international standard, they will not have to spend a lot of money to replace parts that breakdown frequently. It is thus quite easily conceivable that the total amount spent by households to own and maintain their private vehicle would be upwards of RM 500 billion, (furthermore the RM 325 billion is just loans taken out and excludes any cash downpayment.)
If consumers could have obtained cheaper cars, perhaps 25% less than the current market price, consumers would have saved RM 100 billion. This more than offsets the excise tax on ALL products which you are of the opinion would be used to fund subsidies.
Consumers being better off would then not require subsidies. There will be no strain on the Government budget as is the case now. Read more here:
2 comments:
Mahathir robbed, period!!
dpp
We are all of 1 race, the Human Race
Mahathir robbed for himself.
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