Speech by Lim Guan Eng during the 15^th DAP Selangor State Annual Convention in Auditorium Majlis Bandaraya Shah Alam, Selangor on Sunday, 20^th December 2009: 

Malaysians should oppose the proposed 4% Goods and Services tax(GST) as they have to pay an extra RM 6.4 bllion annually or an average of RM 640 annually for each of the 10 million workers 

PR must gear up to face the 13^th General Elections after yesterday’s unprecedented success of the first Pakatan Rakyat(PR) Convention, complete with a PR Common Policy Framework(CPF) endorsed by all 3 parties of PAS, DAP and PKR. The DAP expects the next general elections to be held the latest by the middle of 2011 as this is the time frame announced by the Second Finance Minister Ahmad Husni Hanadzlah for the proposed implementation of the proposed Goods and Services Tax (GST) of 4%. The BN government would not risk holding the 13^th general elections when the GST is imposed fully as this may incur the wrath of the voters.

In view of the differences between all 3 parties, the PR CPF paper is a remarkable achievement and reflects the mutual commitment of the 3 parties to each other and our common goal of replacing the present BN government in Putrajaya. For instance after intense last-minute discussions, DAP was willing to agree to our allies’ request to replace of the term “local government elections” with “strengthening local government democracy”, after we extracted a commitment that strengthening local government democracy would also include holding local government elections.

Legal study groups arranged by the Penang state government have concluded that local government elections can only be lawfully held when the federal laws are amended especially the Local Government Act. Allowing local government elections will be one of the key reforms should PR win Federal power in the next general elections. As such the Penang state government would not be interested in other mechanisms that may be deemed unlawful and even involve expensive litigation and court disputes.

DAP believes that the PR CPF paper which all 3 parties agreed to the strengthening of local government democracy which includes holding local government elections, is a win-win solution for PR. This win-win solution demonstrates the strength of an equal partnership and genuine consultative politics in PR that is required to face the misrule and corruption engendered by BN.

A Royal Commission of Enquiry must be established into the rm 50 million Royal Malaysia Air Force (RMAF) F-5E fighter jet engine theft, integrity of arms purchases and security of our military bases.

The shameful loss and theft of a RM 50 million RMAF F-5E fighter jet engine missing since 2007 to an international company based in South Africa or South America is the latest example. Not only does this shows the complete lack of security in what should be a maximum security air force base but the loss of internal control in that the government only knew now that the fighter jet engine was stolen. This is clearly an inside job.

Up to now we do not know how many such engines or other military equipment were stolen. That is why a Royal Commission of Enquiry must be established into the RM 50 million RMAF F-5E fighter jet engine theft, integrity of arms purchases and security of our military bases.

The systemic corruption embedded in the discredited political framework of BN has reached such alarming levels that even Ahmad Husni himself admitted that leakages from closed tenders resulted in losses of at least RM 28 billion yearly. Just look at the RM 628 million Matrade MICE centre scandal built at an inflated cost and worse in exchange for prime land in KL that has a Gross Development Value of M 15 billion!

But the RM 28 billion losses yearly to corruption may be too small as Time magazine had quoted Daniel Lian, a Southeast Asia economist at Morgan Stanley in Singapore, saying that Malaysia might have lost “as much as US$100 billion since the early 1980s to corruption”.

Ahmad Husni said that the implementation of the GST is a means of placing the country’s economy at a level that is at par with those of developed nations. Fighting corruption would be more effective to put us on par with international standards.

Why impose GST then which would only result in an increased revenue of RM 1 billion when we can save much more by fighting corruption? Or is the real amount borne by ordinary Malaysians actually much higher?

The Federal government and Ahmad Husni should come clean with the actual amount of GST to be paid by ordinary Malaysians. Ahmad Husni said that the government would garner revenue of RM 13 billion for the first year compared with the current RM 12 billion collected from Sales Tax and Service Tax.

Ahmad Husni had said that businesses would save RM 4.1 billion in taxes while the export sectors would save RM 1.4 billion. In other words, businesses and exporters would only pay RM 6.6 billion under the GST. This would force consumers have to pay the difference of RM 6.4 billion under GST to make up for the increased RM 13 billion in total revenue under GST.

Malaysians should oppose the proposed 4% GST as they have to pay an extra RM 6.4 bllion annually or an average of RM 640 annually for each of the country’s 10 million workers.

DAP would also oppose the proposed GST because, as pointed out by Petaling Jaya Utara MP Tony Pua, only 6.7% of its 27 million population pay any income taxes, or 15% of its working population pays taxes. This means that any introduction of GST today would mean a substantial burden on 85% of the working population who currently do not pay a single cent of tax.

The 85% working population are not pay tax not because they are evading paying taxes, but because their income is below taxable levels. Those not paying taxes would now have to pay the GST. The impact would be most severely felt on the 38 per cent of the 5.6 million household in Malaysia with income levels of less than RM2000 a month or 2.12 million households.

What is disappointing is the unconditional surrender and support for UMNO’s GST by MCA, Gerakan, SUPP and MIC. No MCA Minister has defended public interest but has continued to perpetuate this national economic divide by burdening the poor and middle-class instead of fighting corruption to get more money. Why fear fighting corruption so much?

The failure of MCA, Gerakan and MIC Ministers to stand up for a united nation and give meaning to Datuk Seri Najib’s One Malaysia is evident when they supported a 15% preferential income tax rates for professionals in selected areas in Iskandar Development Region(IDR) when professionals in other states have to pay 26%? How can there be One Malaysia when we have one country two systems with double-standards and discrimination in tax treatment?

We can understand the silence of MCA and MIC who are too busy with their petty power struggles? But is Gerakan also having an internal power struggle when their KPI Minister dare not seek justice for other states in demanding a similar tax treatment of 15%? For 18 years, that Gerakan Minister has caused Penang to lose its lead by not daring to oppose unfair, unjust and short-sighted UMNO policies. Now he has still not learned his lesson by repeating his failure and lack of courage at the national level.

In the national interest, DAP calls for a withdrawal of the GST and that the 15% preferential income tax for professionals in selected areas be offered to all in Malaysia and not just in Iskandar.

*Lim Guan Eng, DAP Secretary-General & Penang Chief Minister; Member of Parliament for Bagan