Simple calculation
It shows that the government can do more in expenditure reduction. Through rigorous management and corruption elimination, it may save tens of billions ringgit, which is far more than a few billions ringgit gained from tax increment.
By LIM SUE GOAN/Translated by SOONG PHUI JEE/Sin Chew Daily
Let’s talk about simple calculation today to study how to balance the national Treasury’s income and expenditure for next year. We would like to see whether we should reduce expenditure to increase revenue or to spend carefully and avoid wastage.
According to DAP’s estimation, after the 17 tax adjustments, including the 5% tax on gains from disposal of real property, the Treasury is expected to gain additional revenue as much as RM6.3 billion. The credit card’s annual service taxes of RM50 per principal card and RM25 for each supplementary card are expected to bring RM555 million of tax revenue.
In addition, the 4% goods and services tax (GST) is expected to bring RM1 billion revue in the first year, but it is a matter in 2011.
In terms of expenditure reduction, a new fuel subsidy scheme is scheduled to be introduced in May next year. The government is expected to save RM2 billion. Meanwhile, withdrawing sugar subsidy can save RM720 million.
Therefore, these measures can bring the government RM9.02 billion (RM6.3 billion + RM2 billion + RM0.72 billion) of revenue. However, it is only 4.5% of the total expenditure of RM200 billion, which is not enough even to set up an administrative centre in Putrajaya.
DAP Secretary-General Lim Guan Eng estimated that the government can save RM28 billion if it can eliminate corruption.
The opposition’s estimation may not be accurate. If the government is able to save one-third of the expenditures, it can save RM9 billion.
If the government can also control the cost overruns for construction projects, such as the Ipoh-Rawang electrification and double track rail project which is having a a cost overrun of RM1.4 billion, the amount is even higher than the revenue gained from GST.
The government may also keep the precious national funds by eliminating wastage. For example, the 522 fund and expenditure mismanagements in government departments revealed by the 2008 Auditor-General’s Report involved over RM5.83 billion. There were 317 fund overruns in 34 departments and the amount involved was over RM5.7 billion. In addition, it was super extravagant for the Kuala Lumpur Municipal Council to spend RM32.4 million on flowers.
As long as the 1.2 million civil servants are able to save RM1 per day, it will be saving a few hundred millions of ringgit a year.
The government should carefully plan in lease, too. For example, it is very uneconomical to use RM3.8 billion to rent officials cars for 25 years from a private company as by the end, the 10,000 officials cars are will still belong to the company.
The government may also save a huge sum of compensation by adjusting privatisation contracts. According to the government data, the government compensated RM180 million in 2008 but in 2009, it had to compensate RM380 billion.
It shows that the government can do more in expenditure reduction. Through rigorous management and corruption elimination, it may save tens of billions ringgit, which is far more than a few billions ringgit gained from tax increment.
The calculation is just as simple as that and it depends on the Finance Ministry’s experts whether they know how to calculate it or not.
