Norma Mansor, director of Universiti Malaya’s social wellbeing research centre, said the government would stand to collect RM22 billion a year at a 2% GST rate.
The revival of GST would broaden the government’s revenue base and strengthen social protection programmes, said Norma, a former secretary of the national economic advisory council.
Speaking at a conference on universal basic income in Malaysia, she said universal welfare plans would be more effective than existing schemes which mainly focus on workers in the formal sector and those living in hardcore poverty.
“People in the informal sector and contract workers are not covered by EPF. We have numerous gaps in our social protection scheme,” she said.
Benefits of universal basic income
Economist Geoffrey Williams said a universal basic income scheme would streamline existing social protection plans.
He said the existing mechanism of welfare aid was based on the income level of the people, while obtaining that information has proven to be an arduous task.
“Even if every single Malaysian is registered, you still need constant monitoring. Each update requires a civil servant to approve (the distribution of welfare aid based on their income level),” he said.
A universal basic income at the rate of RM100 a month to all Malaysians would cost the government around RM36 billion a year.
A similar initiative was proposed by Barisan Nasional in its manifesto for the 2022 general election. BN proposed an assisted minimum income scheme that would ensure a monthly income of at least RM2,208 for every household.
However, economy minister Rafizi Ramli ruled out implementing a universal basic income, saying the government could not afford it.
Getting it started
Parti Sosialis Malaysia chairman Dr Michael Jeyakumar Devaraj suggested the government implement the scheme in stages, starting with young people and the elderly “to let the people see the positive effects”.
Jeyakumar added that the income scheme was now more relevant than ever as job markets had become more precarious under the threat of automation and artificial intelligence.
However, economist Nizam Barom of the International Islamic University Malaysia said the public would not favour an income scheme in which cash aid was also given to the wealthy, as it would run contrary to Prime Minister Anwar Ibrahim’s idea of “social economic justice” to help the poor through targeted subsidies.
“Providing cash aid to the bottom 85% of the population is a sellable proposition. But to everyone including the top 15% will be difficult to justify, especially when the money is coming from public funds.”