Category: Society

Categories
Economics Politics & government Society

[3004] Expanding the tax base requires rationalization, sequential approach and public buy-in

The ongoing exercise to expand Malaysia’s tax base (the most popular discussion is the expansion of the sales and services tax, but there are other taxes at play too) has got me revisiting several relevant issues. There are multiple factors to think about in making the policy a success: tax regimes, tax types, distributional effects, redistribution policy, subsidies, etc. These factors cannot be looked at in isolation. Yet, it is possible to talk of them individually as long as we do not lose sight of their interconnectedness.

In that spirit, the five items I have been pondering the most in recent days are:

  • the needs for base expansion
  • political constraints
  • rate of expansion (gradualist versus abruptic approach)
  • spending goals
  • policy sequencing and communication

The needs are clear. The expansion of the sales and services tax is a necessary step towards fulfilling the inevitable requirement for greater public expenditure in multiple fields. The areas are especially healthcare, education, infrastructure (for the purpose of energy transition, data, public transport and climate adaptation) and defense. I have a (partial) list of challenges that Malaysia faces that necessitate greater public spending.

Yet, nobody likes to pay taxes regardless of the legitimacy and benefits of the tax-funded spending. The time horizon mismatched between the benefits of greater public spending and the cost of higher taxation does not work well with voters who mostly more attuned to short-term concerns over long-term considerations (instant gratification factor), and private challenges over public objectives (the tragedy of the commons-like tension). Add concerns for corruption and leakage into the mix (reflecting a low-trust society), this makes any tax hike sensitive to the domestic political stability (or perhaps more accurately political longevity) of a government that functions within a working democratic framework.

Given these constraints (the political sensitivity of tax hikes and the need for greater tax-funded public spending), how fast could the government hike taxes?

The current government is choosing the gradualist approach and it is defensible in many ways: sudden large tax hike would be too disruptive to most people in the immediate terms with welfare-diminishing in the short-term. The last large tax hike was in 2014 when the GST was implemented without flawed tax return mechanism, although it came with cash transfers to mitigate the welfare-diminishing nature of the tax. That was absolutely unpopular and poisoned the otherwise tax regime that is better than the current SST. And Malaysia had taken the abruptic approach before during the Abdullah Ahmad Badawi administration (with Najib Razak as the Finance Minister) through the drastic liberalization of petrol subsidy. That too was massively unpopular.

But the drawback of a series of gradual tax hikes is the expectation-building among the voters, even if it makes the welfare-diminishing aspect more manageable. Surrounded by tax hikes, they would associate the party-in-power with continuous tax hikes (and possibly feeding into inflationary expectations). That is a tough association to live with in an electorally competitive democratic environment.

Most government would like to stay in power and in our democracy, such unpopular tax policy requires a buy-in from the population. Any buy-in must be preceded by a policy and messaging that explain the greater need for public spending and the subsequent taxation.

The sequence must be right: one does not put taxation above spending (and far too many politicians tend to confuse policy sequence too many times, which reflects incomprehension of the issues at hand and the need to take short-cuts for quick gains. Many challenges that Malaysia faces are of long-term in nature resembling a complex sequential puzzle: most of the times, the temptation to pick low-hanging fruits is a mistake in a world of quickly shortening attention span.

Those spending goals must be explained clearly to the electorate. The government must outline the goals (W% of GDP for health by certain year, X% of GDP for education, Y% for defense, Z% for social transfers, etc) in a simple and coherent manner. Explain the benefits and requirement the government seeks to fund. Just as important, these goals must be harmonized a single readable document. And then, the goals have to be sold to the public as seriously as trying to win a referendum (or better yet, an election).

Bit-size documents. Social media posts. Roadshows. Carnivals. Posters. Pamphleteers at shopping malls like how candidates gives out pamphlets at wet markets or food bazaars. These efforts must follow. It is a referendum after all: a referendum of a future of Malaysia that we might want.

At the moment, some of these goals exist but they exist disparately, set in silo buried and in thick unread policy documents. And most government documents are readable only by experts despite being public documents. Worse, sometimes these goals are delivered in arrogant, unsystematic and confusing ways, which wins no allies. That is no way to sell a tax hike necessary to address great challenges Malaysia faces in a fast-changing world.

Categories
Books, essays and others Society

[3003] Reading Gertrude Stein’s Paris France

I am conflicted about Gertrude Stein’s Paris France. There are some great observations in there but the writing style and most of all, the essentializing of a society are something that do not sit comfortably with me.

Stein typed up her stream of consciousness casually with little regards to punctuation. Stein appears not believing in commas no she does not believe in it although sometimes she does, and she does not believe in question mark or quotation marks or full stop as she goes on to stress the same point multiple times although there are times some points are unstressed but I could imagine easily a friend of hers would have asked but don’t you believe in structure to which she would reply but structure is structure is structure like how a rose is a rose is a rose is a rose.

When the back cover of the book claims Paris France is the perfect introduction to her work oh boy I said in my head what an introduction it is with long sentences where nobody is permitted to take a real or imaginary breath so much so that the readers run the risk of asphyxiation for focusing too long on a sentence that runs for what ought to be an impossible length measuring longer than the tail of a long cat or a long dog’s or a long cat’s or a long dog’s or am I suffering from dementia but I would not know but would I know but perhaps I am just frustrated with the writing style.

At times, the style of writing makes reading the book feels like reliving somebody’s fever dream as an anecdote flows into another anecdote before another anecdote takes over the narrative.

Style asides, the essentializing of the French especially of the 1900s-1930s (the book was published in 1940) offers too much generalization. Generalization of money, of luxuries, of logic, of family, of tradition and of fashion.

That got me thinking, how does one write about a society without a hint of essentialization? Maybe essentializing is a big word that I should avoid and that I should not equate it with term generalization with ease. But to write about a society without generalizing to some extent is a tall order. I thought that was something I struggled while writing The End of the Nineteen-Nineties: some form of generalization (if not essentializing) had to be made before any coherent critique could be offered in return.

Or am I too afflicted with apophenia?

Maybe. Yet a society is clearly different from one another and that differences point towards some form of way of life that is true for a particular society but not the other. What is to be written critically of a society when everything is atomized anarchically?

Categories
Economics History & heritage Society

[3000] When history is blurry: reading Patricia Crone’s Meccan Trade and the Rise of Islam

Mecca has a long history. It is so long parts of its history is blurry and backed by uncertain sources. Pre-Islamic sources at best give imprecise descriptions of the city, if the city described is indeed Mecca. Meanwhile, traditional understanding of Mecca’s history before and during the coming of Islam was only developed much, much later.

The orthodox understanding takes the city as an important commercial and religious center prior to the coming of Islam. This much at least has been impressed upon the minds of many who grew up as a Muslim. The seige of Mecca during the Year 570 (the Year of the Elephant), the presence of the Kaaba and Qurasyhi caravaneers are proofs of Meccan commercial and religious prestige during pre-Islamic period.

In the 1987 book Meccan Trade and the Rise of Islam, Patricia Crone challenges the mainstream history of the city by juxtaposing non-Muslim sources with traditional Islamic ones.

The first half of the book goes with great length inspecting trade pattern of various goods that concerned Byzantium, Egypt and Syria in the north, Persia and India (including the Malay Archipelago) to the east, and Yemen and Ethiopia to the south. These chapters are really encyclopaedic entries more than anything else and reading them is a little more exciting than reading a high-level mathematical textbook.

But the conclusion is phenomenal in that all the major trade routes between these locations involving major commodities did not go through Mecca. For most goods by 400s and 500s, sea routes were preferred. The advent of sea trading meant Byzantium could now circumvent the Arabs. In limited cases where land travels were necessary, Mecca was miles off known routes. Meccan trade existed only in the sense that the city folks needed provisions and not in a way of an entrepôt or an emporium. Add to the fact that Mecca was too dry to support a large population with no special commodity of its own that others lacked, it is hard to reject Crone’s idea that Mecca was not a major trading center in pre-Islamic Arabia.

The second part of the book, I feel, stands on shakier grounds. Here, Crone argues Mecca was also not a major religious center. She states that there were three other pilgrimage locations nearby that were bigger than Mecca. This is an echo of her more controversial thesis written in a 1977 book, Hagarism: The Making of the Islamic World. But how does that negate the idea of Mecca as a major pre-Islamic religious center is something that I struggle to process and ultimately unconvinced. This is where other readings will come in handy.

The final part of the book explains two bigger themes that worked in the background: first it is about the state of Meccan (and the wider Arabian) society in the 500s and second, about the unreliability of sources of pre-Islamic Mecca history.

On the first subject, Crone understands Muhammad and Islam as a materialist instead of an idealist phenomenon. That is, the prophet and the religion were primarily a pan-Arabian proto-nationalist movement rising up against Byzantium and Persian influence (instead of the rise of a religion fighting the immorality and decadence of the Jahiliyah period).

On the second subject, these traditional Islamic sources were written long after the rise of Islam—the primary example being Ibn Ishaq—should be considered as an act of storytelling instead of history-writing. Crone argues many of these sources provide contradictory details of the same events. Crone goes on to claim that these Islamic sources place the need to tell ‘the moral of the story’ above the need to record history accurately. That is to say, outside proofs must be considered when (re)constructing the history of Islam.

Categories
Books, essays and others Politics & government Society

[2992] Reading Ta-Nehisi Coates’s The Message

Those concerned with the world would likely take Ta-Nehisi Coates’s Between the World and Me as an important work about racism in the United States. I could only believe the book’s importance would only rise further as the white identity politics entrenches itself in the western world. Coates there reveals the societal hypocrisy that exists in the United States with regards to racism vis-à-vis his experience as a black person. While the subject of Between the World and Me is grim, the language used by Coates across all its pages is beautiful.

Cover of Ta-Nehisi Coates's The Message.

When The Message came out in October this year, I was quick to pick it up. The controversy surrounding the book made me all the more curious about Coates’s latest work. That controversy involved him equating Israel’s treatment of Palestinians as apartheid. He had visited Israel and Palestine (and a few other places) and the book was published as Israel continue to commit horrendous killing not just in Palestine but also in Lebanon, while proceeding with its illegal land grabbing exercise in the West Bank.

Coates’s latest is beautifully written, no doubt, but equating Israel’s behavior to apartheid is hardly a new groundbreaking point. That message and other criticisms he lobs in Israel’s directions are only controversial because pro-Israel readers (and non-readers) consider any criticism of Israel as racism/antisemitism. To the wider world, there is no controversy but only a nod to Coates signifying the lack of moral authority Israel has in order to make such accusation.

Israel is not the only subject of the book. He speaks of his visit to Senegal to explore the history of slavery in the US and his own roots. It is here I think where the language is at its smoothest, hence my favorite section of the book.

In both parts of the book, the seeds are quite clearly the points on racism discussed earlier in Between the World and Me. Realizing this, I feel The Message is an extension of Between the World and Me. The former is expands the reality perceived by Coates in his earlier work with the wider world in mind.

But the act of expanding older points does not make The Message unimportant. Sometimes, profoundness of points made is not the point itself. Sometimes, the point is the realization of something had to be done. In justifying writing The Message, Coates writes:

…The figure is you, the writer, an idea in hand, notes scribbled on loose-leaf, maybe an early draft of an outline. But to write, to draw that map, to pull us into the wilderness, you cannot merely stand at the edge. You have to walk the land. You have to see the elevation for yourself, the color of the soil. You have to discover the ravine is really a valley and that the stream is in fact a river winding south from a glacier in the mountains. You can’t “logic” your way through it or retreat to your innate genius. A belief in genius is a large part of what plagues us, and I have found that people widely praised for power of their intellect are as likely to illuminate as they are to confound. “Genius” may or may not help a writer whose job is, above all else, to clarify.

And so he traveled and wrote.

Categories
Economics Politics & government Society

[2989] Eroding our commons will erode our togetherness

The Malaysian government faces tight fiscal space and the runway to keep going on as we do now is not too long or wide.

The population is still young but it will not be so much longer. This suggests growing needs for healthcare services. In the meantime, education is somewhat underfunded judging by less-than-favorable learning outcomes, compounded or caused by pandemic disruption. Defense is underfunded at a time when the world is becoming a more dangerous place; previous wasteful spending on this front does not help. Climate change requires new kinds of public infrastructure investment. Petroleum revenue is highly like to go down permanently due to rising provincialism, while an aging society means income and consumption tax revenue will struggle to rise in the next 10-20 year period. This has yet to take into account pension liability that the government faces in the same period, which is also underfunded. And, a lot of Malaysians do not have enough savings and in their old age, they will depend on public services more.

The list goes on and on to tell us that under business-as-usual, public spending requirement is rising while there is every reason to suspect that the pace of government revenue growth will not match the former.

The current government understands this and there are efforts to move away from the current business-as-usual scenario. Diesel subsidies has been partly removed (but not in Sabah and Sarawak). There are plans to abolish or at least lower petrol subsidies but that has not happened yet. Recently, the Health Ministry announced it would expand its full-paying patient scheme.[1] This is largely in line with a high-level suggestion made last year that public healthcare should be more targeted to relief fiscal pressures caused by the public health services.

And even more recently, the Prime Minister said education subsidies enjoyed by the rich is to be cut.[2] It is unclear what the actual policy is but that is for us to find out soon when the government tables its 2025 Budget later this month.

But as the government seeks to improve its fiscal conditions, it is crucial to remind Putrajaya that not all fiscal consolidation actions are of equal measures. While fiscal pressures are important and must be addressed urgently, it is not the only things that matter to this country. When it comes to cut or rationalization of public service, it is good to take a step back and reassess what we would lose in return for what we would gain not just in the short Parliament terms, but also in the long-term. After all, most of us save the unfortunate ones, live beyond the 5-year parliament term.

What we would lose from reduced access to public education and health services (and other similar services provided by the government) is the commons. It is the space where we Malaysians theoretically—really, actually for many people—come together regardless of our origins in terms of geography, class, gender, ethnicity, etc. That togetherness allows for the creation of shared lived experience or even shared identity. In an age where technology and quirks of history are leading us to live in our little bubbles, it is our public service that attempts to connect these bubbles into a larger common.

Without these commons, we Malaysians will lose connection to each other, losing whatever left of our shared values and shared identity. Erosion of these commons necessarily lead to the erosion of our togetherness.

I do not think these commons should be eroded by concerns over fiscal pressures, especially when these pressures could be alleviated through other more effective means. Instead of applying the knives to public education and public healthcare systems, other policies could be jettisoned first, like outdated incentives and reliefs provided to private healthcare service providers or private insurance, or outdated subsidies for electric vehicles. And of course, cutting petrol subsidies would go a long way too (although with crude oil prices are low these days, one wonders how long it would go).

And really, Malaysians are able to pay much more taxes. But we refuse to do so.

Our refusal points to another problem: our reluctance to make short-term sacrifices to ensure larger long-term gains and sustainability. It seems that we rather avoid the short-term pain and instead lose something valuable in the future.

Hafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reservedHafiz Noor Shams. Some rights reserved

[1] — Health Minister Dzulkefly Ahmad is standing by the government’s proposal to expand private wings at public hospitals as part of a hybrid model termed “Rakan KKM” (Health Ministry Friends). [Health minister defends private wings at public hospitals plan. Malaysiakini. September 24 2024]

[2] — Menjelang pembentangan Belanjawan 2025 tidak lama lagi, Anwar Ibrahim menghantar ‘isyarat’ yang menunjukkan kerajaan sedang meneliti pengagihan subsidi pendidikan kepada rakyat negara ini. Berucap di Putrajaya hari ini, perdana menteri berkata, kerajaan mahu memastikan subsidi sebegitu disalurkan kepada golongan yang benar-benar layak saja.[Golongan kaya mungkin tak lagi dapat subsidi pendidikan. Malaysiakini. Accessed March 31 2024]