keithrozario.com

I’ve been away for more than a month now. Much has happened since then.

I went to Pakistan, where (believe or not) I found a bible in my hotel room at the Avari Towers, and everybody (including my taxi driver) knew where to find beer.

I was ill for a bit, and then was just plain down for a couple of weeks.

Now I’m back, but for my first post in 2 months, I’d thought I’d take it easy and start with something simple to write about…..like how stupid Najib is.

I can write entire volumes on why Najib is an idiot, but I won’t. Instead I’ll focus on just 2 lines in the recently announced budget.

Like a lousy tape-recorder we’ll first have to tackle this issue of Credit Cards. I personally don’t like them, yet I use them because of the massive convenience they provide. I can’t remember the last time I had to walk all the way to the cashier just to pump my petrol. Nowadays, I just swipe at the pump and away I go.

Of course, not forgetting it would be impossible for me to buy my books from Kinokuniya or Amazon without my credit cards, and holidays would be a whole lot harder if I couldn’t swipe my card at the hotel.

However, taking into account the grim reality that most bankruptcies occur as a result of credit card, and the huge psychological impact a credit card has on your spending habits. Recent research shows that credit cards cause us to spend up to two times more than normal. It only make sense for the government to discourage credit cards.

That however, does not give the Government right to tax me just because I have a credit line with the bank. Has the government lost all innovation that it’s great idea to reduce credit cards is to tax me for having one? Why does the government wish to tax a credit facility I have with the bank, the solution would be proper regulation of credit card applications.

Considering that the CTOS/CRISS or whatever it’s called can track how many credit cards I have at one time, it should be no problem for the government to regulate what it already knows.

This is without a doubt, the DUMBEST thing I’ve ever heard.

Why are we reducing the tax rates for the rich? Shouldn’t the rich be paying more taxes.

Maybe the government doesn’t understand, that in order to build infrastructure it needs money. Most of this money comes from Petronas, but a sizeable portion comes from income tax, and most of that from the top marginal tax rate.

Most Malaysians don’t pay taxes, simply because they earn below the taxable income line. Those that do are mostly from the middle income.

However, it wouldn’t surprise me to learn that the top 10% of tax payers contribute more than the remaining 90% combined.

If someone drives around a Rm200,000 BMW, they’re likely to be paying anywhere from Rm3,000 to Rm4,000 in car installments a month. They’re also likely to be paying another Rm5,000 in house installments. Put those 2 together and the personal income of a person owning a BMW would be Rm20,000. Meaning every BMW owner probably earns around Rm200,000 a year.

The minimum income to start paying income tax is Rm3,000 a month or more precisely Rm36,000 a year. The rate of tax would be roughly 7% per year, compared to the 26% for the BMW owner.

Roughly the amount of tax paid by the BMW owner is nearly 10 times the amount paid by the minimum income worker. That’s the state we’re in. That’s why we need to tax the rich as much as we can, not reduce their taxes.

Most proponents argue that the rich will spend to stimulate the economy. Here’s the thing….they’re rich. They are ALREADY buying all the food the need, they are ALREADY buying the housing they require and they are ALREADY shopping.

The only difference is that maybe this year they’d buy 2 Coach bags instead of 1, they’d buy a BMW 5-series instead of the 3-series. Maybe they’d buy a higher end Italian suit and maybe they’d get a holiday in Scandinavia instead of Tokyo.

See where this is going, when you’re rich, the extra spend you do contributes far less to the economy than meets the eye. Sure the 5-series is RM100,000 more, but it has no impact whatsoever to the economy.

Consider if you reduced taxes on the lower end, making it so the guy earning Rm3,000 doesn’t need to pay taxes. That’s more spending for the average joe, and more economic stimulus from 250,000 average joes spending, because their spending actually impacts the local economy creating jobs and stimulus to keep it going.

A tax cut to the rich is wrong, we need the money now more than ever, so why don’t we INCREASE their taxes by 3% and reduce everybody elses. The Bush tax cuts in America is one of the reason why America is in trouble today…let’s hope the same won’t happen in Malaysia.

That’s my 2 cents don’t spend it all in one place.