economically it's a good idea.

Less dark economy.

you can choose

1. Taxation of 10%, ringgit remains stable as government no longer print money but choose the painful path to increase taxation but maintain value of ringgit.

2. No taxation, but ringgit depreciates another 10% due to more deficit and printing of money.


You buy from China, RM300, gomen tax 10%, you pay RM330.

You buy from China, gomen no tax, but ringgit falls 10%, you need RM330 to buy the same amount of good.

Which one you choose?

This post has been edited by Chrono-Trigger: Dec 15 2023, 09:22 PM

I am saying in general, the government can choose few ways to deal with increased spending.

Taxation is not popular because it puts less money in people's pocket. GST isn't popular because everyone gets taxed. But taxation has net effect of decreasing money supply in the system in some ways because there is less ringgit circulating in the market which has effect on consumption and inflation. Less people spend , less demand for good, prices of good fall.

Taxation also increases government revenue and reduces deficit, which investors like as they will see Malaysia as stable. Ringgit will be stable.


If you don't tax, government has no way to get more money but resort to borrowing by issuing debt papers, which has net effect of increasing ringgit supply vs US dollar in market. In long run, our deficit will be high, and debt reaching 1.5 trillion now, which looks very bad for investors. Even local investors are worried about it and convert their Ringgit to USD and SGD, making ringgit depreciates.

You will still get RM2000 in your hand, but that RM2000 can buy very little things.. like what is happening to ringgit vs SGD....

at least the current government is more responsible fiscally, unlike previous government just dig into people's own money in EPF as solution.

But it will take time for ringgit to recover. The ringgit has a crisis of confidence, not only from foreign investors, but from Malaysians themselves.

A very simple question is , if there is a free flow of money and opening of account, which currency would you hold now?

SGD, USD , pound, euro right?

if even malaysians are converting their Ringgit to USD, ringgit cannot stop depreciating unless there is a capital control.... but that will further erode malaysia standing in world financial system....