Heart-warming solidarity: From Tabung Harapan to a progressive taxation system

The sense of a new Malaysia continues to leave many hopeful for the future. Solidarity buka puasa gatherings have been held in a few places, bringing together Muslims and people of other faiths.

Jun 08, 2018

By Anil Netto
The sense of a new Malaysia continues to leave many hopeful for the future. Solidarity buka puasa gatherings have been held in a few places, bringing together Muslims and people of other faiths.

At one such buka puasa gathering which I attended three weeks after May 9, many were still talking excitedly about the general election as if it had just taken place yesterday.

People were still savouring the moment as if it was yesterday, pinching themselves to make sure they weren’t dreaming the whole thing up. They recalled, excitedly, how they felt on the night of May 9, barely able to grasp that an unbelievable new reality was being ushered in, a new order replacing the old corrupt, decaying regime.

“We must treasure this camaraderie and nurture it so that we don’t fall back to the past again,” said Jenny Liew, the Penang representative of the organising group Malaysians for Malaysia.

Many want it to be normal for Malaysians of all faiths and backgrounds to come together and share a meal, she added.

“We want to write a new narrative for our beloved nation because the old is gone and the new has come – the #MalaysiaBaru!”

Yes, the new Malaysia is here to stay and there is no turning back. After feeling empowered with the general election outcome, many now feel they have a stake in the country and are taking a close interest in daily events such as the proposal for Tommy Thomas to be the next attorney general.

This concern and love for the new Malaysia is reflected in the great outpouring of donations for the Hope Fund (Tabung Harapan) — a heart-warming gesture of solidarity in the quest to rebuild the nation, which is saddled with huge debts.

Even the Malaysian churches have got into the act: they will pass on weekend collections from their congregations to the fund.

Certainly there is a mountain of debt staring us in the face. The RM1 trillion federal government debt figure is just a ballpark figure: careful analysis is needed to determine what else there is on top of actual debt: ie the potential debt (through government guarantees) and any hidden debt (through fancy public-private financial arrangements).

So many ordinary people are contributing what they can afford. Those who have little are contributing a little. Those who are better off, a bit more, and the wealthy, hopefully, will be donating a lot more.

This is what solidarity is about: everyone chipping in what they can for a higher cause, for the common good. Already tens of millions have been collected.

Most of these donations are likely to be one-off payments from individuals rather than repeat payments over the long run. And after a while, fatigue will be likely to set in and the donations will taper off.

But wouldn’t it be beautiful if this act of national solidarity could be sustained? Wouldn’t we want to have an ongoing mechanism to express such social solidarity for the long run?

The good news is that there is such a mechanism! It just needs to be tweaked. It is called taxation — or more accurately, a progressive taxation system (as opposed to a regressive taxation system).

Under a progressive taxation system, the rich who can afford to pay more will pay taxes at a higher rate, the middle class pay less taxes and the lower-income group, minimal taxes while the bottom of society will be exempt.

The removal of the GST, a regressive tax, is the first step towards the establishment of a progressive taxation system.

Other new taxes can be introduced which will not burden the lower income group: the sales and services tax on more expensive or luxury items, an inheritance tax, a more effective capital gains tax (to reduce speculative activity), a Tobin-like tax on forex and other financial transactions and a windfall profits or super profits tax for companies reaping large monopoly profits.

If the government is trustworthy, people actually won’t mind paying higher or extra taxes, because they know that their social security would be taken care of, their children’s education and even their post-retirement income and healthcare needs. They will trust the government to spend the tax revenue in a way that will benefit the people in so many different ways — and not just better government hospitals, public schools and genuinely affordable housing.

Even the wealthy or well off would like such a progressive taxation system: they will feel safer, as with reduced income inequality, the crime rate and other social ills will drop. In addition, less taxes on the lower-income group eg the removal of GST, will mean that more people will have more money to spend and this can only in turn generate demand for products that businesses produce.

In surveys of the “happiest places” in Europe, people explained their reasons for contentment, and it included policies that took care of the social security and welfare concerns.

The Aliran columnist Benedict Lopez recounts a visit to Copenhagen when he asked a Pakistani taxi driver about his 30 years of experience living in Denmark.

“I love this country,'” he responded. “I pay 50 per cent of my income in taxes and I have no complaints. I don’t have to worry about my children’s education from primary school to university as it is free. My whole family’s medical treatment at clinics and hospitals is also taken care of by the state.

“When I reach the age of 65, I get a state pension. In this country, everything moves and there is no corruption and you don’t have to grease anybody’s hands to get anything done.”

So one of the spin-offs of a progressive taxation is people are less stressed and anxious about the future. People won’t have to worry and work bertungkus lumus, day and night, to save up colossal amounts for their children’s education, medical emergencies, retirement savings or sudden loss of employment.

Just like contributions to the Hope Fund, they will feel a greater sense of social solidarity and love for their country and the other residents of the country.

So let us hope that the GST removal and the Hope Fund will eventually usher in a more progressive taxation system that will take care of all the people in this fair land.

Let us continue to pray for the new Malaysia that is being ushered in step by step.

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