Analyst: 2 factors have altered Malaysian politics

Researcher Francis Hutchinson says the people now hold the government accountable for where their money is going as the GST affects everyone.

KUALA LUMPUR: An analyst says Malaysian politics has been altered by two factors: the introduction of the goods and services tax (GST) and fragmentation of Malay-based parties.

And both will have an impact on the upcoming general election, according to Francis Hutchinson, a senior fellow at Singapore’s Iseas-Yusof Ishak Institute.

Hutchinson, who is also coordinator of the institute’s Regional Economic Studies Programme and Malaysia Studies Programme, said now that every Malaysian was paying tax on daily items due to the GST, they expected accountability from the government.

And now that there are more Malay-based parties, the Malays have more choices to represent them.

Hutchinson said this when speaking about Malaysia’s May 9 general election at The Straits Times Global Outlook Forum in Singapore.

“Regardless of who wins or loses, Malaysian politics will change in (these) fundamental ways,” the Straits Times (ST) quoted him as saying.

Without the GST, fewer people would have felt the tax pinch because only 2.3 million Malaysians, or about 15% of the workforce, pay income tax.

“People change: Once you start paying taxes, what you expect of the government also changes… If you are going to tax me, I want to see where the money goes,” Hutchinson said.

Outlining how structural changes in taxes and federal revenue had led to greater political pressure on the government, he said money from oil dropped from 40% of federal revenue in 1997 to 14% last year.

“This means that 86% of government revenue needs to come from firms and people, as opposed to coming out of the ground… It comes from the rakyat,” the ST quoted him as saying.

The introduction of GST, Hutchinson said, meant that everyone now paid tax, instead of only the top 20% of income earners and the upper-middle class.

According to the report, the lower-middle class, which found itself paying taxes for the first time, was hit the hardest as a third of the group’s daily household items are not exempt from GST.

“Every time you buy toothpaste, you top up your mobile phone, you buy Milo, you are paying tax and you can see that in your receipt for the first time,” Hutchinson said, noting that the unhappiness over the GST was an effective tool for the opposition Pakatan Harapan and PAS to start asking where the people’s money was going.

By taxing people instead of oil, he said, the government was forced to be more responsive to voters.

“It is in your interest to make sure they have enough wages to have a surplus that you can tax… You cannot lose money through mismanagement and corruption,” the ST quoted Hutchinson as saying.

That was the reason the cost of living and the GST were such strong election issues, he added.

Another fundamental change, he said, was the fragmentation of Malay political parties. Umno had ossified over time, Hutchinson noted, adding that splits over the years had created other Malay-majority parties: PAS, PKR, Amanah and Dr Mahathir Mohamad’s PPBM.

In the report, he added that Malay voters now had more choices, which made their vote more about ideas and ideology rather than race.

Click here to get live updates throughout the GE14 season