The PM said it - it is a Budget to foster a business friendly environment. Now, for example, companies are allowed to carry forward their accumulated losses and unabsorbed capital allowances during their pioneer-sdtatus period and deduct these from their post-pioneer income.
The country's SMEs will now have fresh capital with the recently set-up SME Bank and its RM1.0 billion venture capital fund.
Now the group tax relief for 50% of the losses suffered by subsidiaries introduced in this budget is also a heaven-sent gift. In the past, such losses have severely affected group earnings, and have often led to the closure of such subsidiaries. With such group relief, the parent holding company may be able to give such subsidiaries more time to go through a gestation period. But one has to ask here: if such subsidiaries are bleeding financially, they should surely be written off and close off to prevent further losses, not keep on hoping they will make good eventually!
For the civil servant, they will get 1 1/2 months' bonus pay if earning below RM1,000 a month, and 1.0 month for those earning above RM1,000 a month. Pensioners get special payment of RM200 in October 2005, and COLA for civil servants of between RM50 to RM150 a month, depending on where they work from January 1, 2006! RM3.6 billion now set aside for better housing for police, teachers, armed forces, firemen and customs officials. No attempt has yet been finalized to deal e.g. with the huge, astronomical, ever-increasing Government pension bills, since retired Government staff not only gets 50% of their last drawn salary as pension, plus all medical benefits etc., but when they die, their spouse continues to receive such benefits! So the bloated Government bureaucracy gets more money instead of looking to trim costs, and cut down deadwood staff, go on VSS etc.
The so-called hardcore poor gets a few more ringgit in this Budget - orphans assistance increased from RM80 to RM100 a month, old and needy from RM135 to RM200 a month, family welfare assistance increased from RM350 to RM450 per month.
But for the average man in the street, what do we get? Sad to say, very very little goodies:
* RM4,000 tax relief for each child studying at institutions of higher learning, at home or abroad, (against previously RM1,000 if abroad), RM9000 to parents with disabled children studying at such institutions (against RM5,000 previously);
* The scope of courses that will now qualify for the existing RM5,000 tax relief will be broadened to now include professional qualifications as well as accounting and law courses - you only benefit if you happen to do such courses!
* Nothing on separate EPF and medical insurance tax reliefs: Presently, one gets maximum RM5,000 for total of both items. If a guy earns RM4,000 a month, his 11% EPF monthly contribution will be RM440, and 1 year becomes RM5,280 contribution - more than the total RM5,000 relief here. So why buy life/medical insurance as the Government is encouraging?
* All the crap talk about an IT society means nothing: presently one gets RM400 computer rebate, but this is claimable once every 5 years! Where the hell can you buy a computer for RM400, and even then, are you supposed to change it only once every 5 years? This damn equipment is outdated every year!
So the business community is very happy as the cost of doing business will be reduced, "a realistic budget to sustain growth" seems to be the flavour of the day. Somehow, what is forgotten is that the so-called stronger private sector-driven demand can only be sustained if disposable real income at the hands of us poor sods are at least maintained, if not increased - and this is not going to happen with this Budget - and the continually soaring oil prices, expected increases in food, transport, and other essential good prices - will only add further our inflationary risks and resultant lower incomes. Inflationary pressures have risen to its highest in six years on our domestic front, and with no additional tax reliefs in sight, and/or reduction in the personal income tax rate for example, what is there for the majority of us average wage-earners, retirees, old and needy etc., not very far from your "hardcore poor"?
BIOFUEL POLICY:
At this juncture, all the more urgent we must move towards a biofuel policy:
* Doubling the 51 natural gas retail stations by 2007 is peanuts - have you seen the forever long queues at just one Petronas natural gas service station at Damansara Jaya every day without fail? If we are serious here, increasing it to 500 stations is not that impossible, plus bigger incentives to taxis, buses, private vehicles etc. to convert to natural gas usage.
* The Government will set up three palm oil bio-diesel commercial plants with total capacity of 180,000 tonnes. I have no idea what 180,000 tonnes will give you in terms of vehicle usage, but I understand France has a much bigger rapeseed biofuel capacity in operation, and if so, we can surely learn how this is done;
* Brazil has for years been using sugarcane as "gascohol" and I understand their usage is something like 30% or more of their national fuel policy, and at much cheaper costs than oil. Again, we can learn from them how this is done.
SIN TAXES:
Taxes on booze and cigarettes to be increased by 9% and 13% respectively in this Budget against 40 - 43.5% for cigarettes and 26% for liquor in the 2004 Budget - truly a very small increase to "encourage Malaysians to adopt a healthy lifestyle" according to the PM's speech here!
Just why our Government is so beholden to the cigarettes and booze companies we will never know. Just consider the devastation that cigarette smoking alone has caused to the Malaysian population over they years:
* How many smokers are there in Malaysia? Seems God only knows! I can't find any decent statistics from Ministry of Health figures - nothing seems to be available on smoking, number of cancer deaths etc.
* Even MAKNA, the National Cancer Council of Malaysia, talks in general terms with no statistical backup. It tells us that lung cancer is the main cause of cancer deaths in Malaysia, and 95% of lung cancer patients die within 5 years of diagnosis, and that 90% of lung cancer is a result of cigarette smoking.
* Seems statistics from WHIO are thus the most reliable, and some of these pertinent ones relating to Malaysia are:
Year : 1995 2025
___________________________________________________________
Population 20,140,000 31,577,000
All Adults, ages 15+ 12,820,000 23,933,000
Female Adults 6,366,000 7,729,000
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Smoking Prevalence:
Adults (18 Years and Older), 1996 Youths (16 Year Olds), 1996
_____________________________________________________________
Males 49.2% Males 25.1%
Females 3.5% Females 0.6%
Overall 24.8%
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Annual Cigarette Consumption:
Year: Per Capita Consumption Total Consumption
(cigarette sticks) (millions of cigarette sticks)
_____________________________________________________________
1970 1,377 8,277
1980 1,963 16,839
1990 1,660 18,807
1995 1,601 20,522
2000 1,274 18,653
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
On a three-year moving average, using 1970 as a base of 100, the annual per capita consumption from the above statistics appear to trend downwards - to 89 in Year 2000, but you will note that in terms of Total Consumption (millions of cigarette sticks), the figure has shot up from 8,277 million in 1970 to 20,522 million in 1995 and down to 18,653 million in 2000 - still an increase of 225.4% from 1970 to 2000!
In other words, over the years, the number of smokers have gone up, even though per capita consumption went down. In the Star, it is reported we have 3.7 million smokers as of today, but in a circular for a Petition Against International Tobacco Trade Exposition to be held in K.L. in November 2005, the figure quoted is 4.3 million, and it is further stated that about 10,000 Malaysian die each year from smoking.
The Star 01/10/2005 issue stated that the new Budget 2006 price of a pack of 20's cigarettes is expected to be RM7.00 in Malaysia. This is still very much lower than: Singapore S$11.00 (RM24.50), Australia A$8.00 (RM23), BruneiB$5 (RM11.25), Hong Kong HK$25 (RM12.50), South Korea 3,000 won (RM10.80).
As such, why is the Government pussyfooting with these cigarettes companies, increasing these taxes by so little amounts each year, as to make anti-smoking a farce? Do you know that Malaysia is considered as the cigarette manufacturers' "indirect advertising capital of the world" since we allow these companies to continue advertising - indirectly through their Salem House, Camel clothes, Peter Stuyvesant Travel, etc.?
Consider the loot available if we step up sharply the tax rates on these cigarettes:
At Est. 20,000,000,000 cigarette sticks for year 2005 (or 1,000,000,000 20"s packs)
Tax at RM5.00 per pack (to become, say RM12.00 a pack selling price)
Voila! Government Tax coffers increased by RM5,000,000,000 alone from Fags!
And how many less buggers will smoke, or forced to give up smoking now that fag price
has gone up from say RM6.50 to RM12.00 per 20's pack?
And finally, by definition, there should be much less lung cancer deaths - and definitely
not from the bloody useless and expensive RM20 million "Ta'Nak" fag campaigns!
But when, if ever, will the Government have the courage to do this, plus increasing very much more sharply the other sin taxes on alcohol, which is "haram" isn't it? And, if done literally with 1 stroke of the pen, you help solve/alleviate 2 major curses in this country, saving billions of ringgit in medical and healthcare costs, drugs costs etc., as well as getting million kudos from thousands of much more thankful families! So Just Do It!
