Property-related taxes not main cause for high cost of living

I REFER to the interesting articles by Isham Jalil, the special officer to the prime minister published on Monday and Tuesday.

He claimed that "property-related taxes are the main cause of increase in cost of living", in Selangor and Penang.

He is right except that it is arguable if property-related taxes are the main cause for the rising cost of living in Selangor, Penang or anywhere in Malaysia.

Inflation and cost of living have been sadly steadily rising over the years. To add to the problem, the incomes of the poor have remained relatively low. Hence workers and low-income earners feel the pinch of higher and rising prices, much more than anyone else and it hurts badly.

Thus we have to give special attention to alleviate the sufferings of the poor and needy. If we don't do so in time, we run the risk of social unrest, if not now, then in the near future.

Selangor Mentri Besar Datuk Seri Azmin Ali has to accept that any tax will always add to higher cost of living. Property-related taxes have contributed to price increases.

But how do we avoid raising taxes? If we want to provide more facilities for the poor, and rightly so, how do we raise funds to build more roads, bridges, schools, hospitals and housing and transport?

Many causes

It is not only property-related taxes that are causing prices to rise. There are many other causes too. We cannot ignore them.

Lets review some other causes:

» First, our economic structure needs much more reform. Our demand for goods and services is greater than the supply of goods and services. This leads to disequilibrium and that is the fundamental cause for rising prices.

» This structural problem can be caused by several factors. These include low productivity, inefficiencies in our economic system, too much protection for special groups and even too much politicking.

» Our weak ringgit can raise import prices. Higher import prices lead to higher costs for our consumer goods and services. Most of our food is imported or has foreign import content thus raising our prices. Even our nasi lemak, kuay teow, roti canai and thosai have imported higher priced ingredients. Hence Malaysians are paying more for less.

» Corruption is high and widespread and is adding to extra costs to doing business. Of course, the businessmen and traders will suffer from lower profits due to forced corruption. Hence they transfer their losses to the consumers, like all of us.

» Government expenditures that are imprudently spent as indicated repeatedly in the Auditor-General's Reports also cause higher costs of goods and services. Leakages can drown us in time.

The above are some of the many reasons for rising prices. The higher cost of living is eroding our standards of living and our quality of life. But the poor and low-income groups are suffering most of all and badly too.

As the latest Oxfam report points out: "The world's richest 1% made 82% of the wealth created last year, while the poorest half of the population received none (no increase in wealth). This is a serious indictment against the whole world and our international economic models, policies and practices.

Income and wealth disparities are also widening here in our own country. Rising costs of living are worsening the socio, economic and even the political situation. That is why people like Prof K. S. Jomo, Tan Sri Sherif Kassim, Prof Lin See Yan, Prof Andrew Shang, myself and many others, have been calling, for a long time for more major socio-economic and even political reforms.

We all hope that all the political leaders and parties will provide manifestos that will address our many basic underlying long-term structural problems and sincerely follow through regardless of who forms the government.

Malaysia and Malaysians must come first, rather than political parties and individual politicians, please.

Tan Sri Ramon Navaratnam
Chairman
Asli Centre for Public Policy Studies