Its better to TAX more than kill the goose. i think.

High tax means high cost of doing business, less economic activity and less foreign investment. And in this economic climate will speedily result in a dead goose anyway.

Wanna see high tax in action? Greece. That is why the eu system is scavenging their assets. Instead of increasing taxes and further have more of their assets strip they are better off to default and leave the eu.

Malaysia can do without higher tax too. The end is a dead goose too with higher taxes.

This post has been edited by Binyamin: Aug 27 2015, 09:36 AM

Malaysia economy is plague by a lot of negative factor, it’s a matter of time we will crumble to the pressure unless something is being done.
1) fundamentally we do not have a strong economy despite what is painted by our brilliant politician compares to some of the neighbouring countries like sg and vn which they keep on moving forward. Since the last decades the emphasis in how to keep holding on in power instead of strengthening the economy.
2) the gloomy world and china economy outlook.
3) falling crude oil price , where we are heavily reliant on PETRONAS for revenue.
4)high debt in terms of bonds help by foreigner
5)political and corruption scandal
6) depleting coffer , e.g. foreign reserves and especially now they are trying to dig into the pencen fund, pilgrimage fund, epf and etc
7) US. Interest hike
And I hope that the GST system also will not crumbles as I heard from several sources that currently there is some businesses that are unable to claim back the input and output tax diff from gov for many months. Some business only have working capital for few months, if this is being tied up they will need to close shop. If this is seriously true we are in big trouble.

However Tax is only on Profit. Whereas interest rate is a biz expenditure before profit. Thats killing the goose in its tracks.

looks like best way is to tighten our fiscal policies. Which Bn will not do. DEAD END.

In my personal opinion if we eliminate all corporate and income tax and we eliminate also employer contribution to epf. Only implement consumption tax like gst I think we might do better than even singapore.

We should never ever punish business for doing business.

This post has been edited by Binyamin: Aug 27 2015, 09:50 AM

4) Actually our portion of debt held by foreigners is not that high compared

7) Do you seriously think US will hike their interest rates? Do you seriously think US economy is in good state?

They need to hike interest rate or else their states will go bankrupt trying to pay for pensions. Its a catch 22, benefit themselves or benefit the world.

USA mistake was they did not raise back interest rate after the 2007 crisis. As a result all emerging country borrowed heavily in USD.

A solution to an old problem not lifted becomes another problem down the line.

It's a definite that most of the emerging countries are going to default as the USD gets higher. They will receive the margin call from hell itself. Malaysia is also on the chopping block too

This post has been edited by Binyamin: Aug 27 2015, 10:03 AM

precisely, the US interest rates has been very very low for a long time. Its just a matter of time, they will need to adjust it.

Not just the world. In a way they are like us. maybe worse. Their REAL unemployment rate is very high. This is what is really holding the Feds back on hiking.
Hike and the economy stalls and unemployment rises.

How does the rate hike assist in the state pension funds? i thought most funds would be in the equity markets?

Don't think it was mistake. Raise rates and yr economy stalls further. They had to QE their way out. Therefore interest rates had to stay low.

prophetjul,

1) THE GOVERNMENT usually has a deficit of 40 to 50 billions even with normal income.

But,

2) Given the drop in Oil Price, THE GOVERNMENT will collect a lot less from Petronas this year..

So, in summary, even increase GST by another 6% to 12% and cut all petrol subsidies is NOT ENOUGH.

Dreamer

This post has been edited by dreamer101: Aug 27 2015, 10:09 AM

prophetjul,

the news on the Feds US Interest hike stance is all in the net. They are just waiting for the right moment implement it. Anyway the main discussion is not US. The point is if this US rate hike happens, the negative impact it will have on Malaysia.

Their mistake for not raising interest rate has only recently started to show its ugly face... the rise of the USD. Capital world wide are now heading to USA prepping up USD and sending USA into a recession. Irony at its finest

no need for int rate hikes?

then, likely some form of capital control may be in the making.

which will most likely make things worse.

i think they will not dare to raise interest rates after a recession! They probably learnt from Volker

During his time as the chairman of the Fed, Volcker is credited with ending the high levels of inflation that the United States experienced during the 1970s and early 1980s.
When he became chairman in 1979, inflation was high and peaked in 1981 at 13.5%. However, due to the work of Volcker and the rest of the board, the inflation rate dropped to 3.2% by 1983.
Volcker raised the federal funds rate from 11.2% in 1979 to 20% in June of 1981. The unemployment rate became higher than 10% during this time as well.


Source: Boundless. “Volcker Disinflation.” Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 27 Aug. 2015 from https://www.boundless.com/economics/textboo...tion-475-12571/

Doesnt mean they will. China did a fast one on them.

Major and Many Currencies Dropped against Strengthen GreenBACK (US Dollar) .
There are many currencies out there.. http://www.tradingeconomics.com/currencies ==>

It is USD is getting stronger and stronger, as FED going to hike interest rate. Many hedge funds are
relocating their $$$ from emerging market back to USA.

In DOUBT, ask and ASK or seek Uncle Google help for own rational critical thinking mind. Do not 100% trust and believe
PHOTOSHOP EDIT photos in Social Media/Networking.

This post has been edited by netmask8: Aug 27 2015, 11:36 AM

The announcement from the FED alone already has such impact on the market. what happens when the times comes.

Holding on to 4.2355 now