By Hafiz Jasri
The last time I went to Langkawi must have been about 5 years ago. There was not very much to do on the island at the time other than to visit the usual attractions like Makam Mahsuri, Pantai Pasir Hitam and Beras Terbakar. The island has changed a lot over the years. Now, there are many types of accommodation to choose from. The more adventurous visitors may prefer backpackers' hostels, while those with money to spend can opt for the luxurious private villas. And there is a very wide choice in between. There are also many new attractions to visit. I highly recommend the Panorama Langkawi Cable Car. The "skycab" journey to the top of Mount Machincang is not to be missed, and the view from the top is really stunning. Travelling to the island is much easier today. I remember getting sea-sick every time my late father took us to Langkawi because the ferry at the time was small, making the journey quite rough. But now the ferries are much more comfortable, or if you prefer, you can also take a flight. Transport on the island itself is quite easy too. Taxis are aplenty, but I opted to just hire a car for the duration of my stay. It is cheap, and much more convenient. As someone who has not visited the island for so many years, many places have changed beyond my recognition. In particular, Pantai Cenang is nothing like what it was before. I was pleasantly surprised to see how the area has developed and the large numbers of foreign tourists in the area. But it was not all foreign tourists. There were also large numbers of domestic tourists. Instead of going to the beaches, domestic visitors seem to congregate more in the shopping area of Kuah town. One shop that I went to had a special Raya sale, and it was packed with shoppers buying boxes and boxes of crockery and clothing items. Business was clearly going well. I took the opportunity to speak to some of the domestic tourists and locals to find out what they thought made Langkawi what it is today. Almost everyone heaped praise on former prime minister Tun Dr Mahathir for declaring Langkawi a duty-free island during his premiership. They singled out the duty-free status as a key factor that catalysed the island's development, and the reason why so much investment is coming to the island. Two conversations are stuck in my mind. One was with a lady in her mid-sixties. She travelled all the way from Taiping for what has now become a biennial shopping "pilgrimage" for her family. She said she spends around RM1,500 on household items and clothing, plus a few hundred ringgit more for travel and accommodation. She insisted that it was all worth it because she could buy items that are of higher quality at a cheaper price. But she also complained about having to make such a long journey just to shop, wondering why there can't be more places that offering prices like those at Langkawi. The second conversation I had was with the owner of a restaurant not very far from the hotel I was staying at. She told me that when she was younger she had to walk almost an hour every day just to go to school because her late father couldn't even afford a motorcycle. "Now, that is my second car," she said, proudly pointing to a shiny Lexus RX350. The benefits of abolishing the oppressive excise duty on cars is palpable in Langkawi. Of course, my short trip to Langkawi can only provide anecdotes of the benefits of a low-tax policy to society. I am not attempting a comprehensive write-up for low taxation through this article. The story above is just an account of what I observed and I am sure that a short trip to Langkawi would enable anyone to also see the physical evidence of the benefits of a low-tax regime. It is clear for all to see that since Langkawi was declared duty-free in 1987, the island has become more prosperous, the locals have created more wealth for themselves and their families, and the standard of living has improved in many ways, including for the poorest. Other experts have studied the impact of low taxation on economic growth and the evidence is promising. For example, Jeffrey Miron, director of undergraduate studies at Harvard University, has time and time again argued that reducing the overall tax burden would stimulate the economy in the short term and set the stage for long-term economic growth. And, Thomas Sowell, a Senior Fellow at Stanford University's The Hoover Institution, once wrote that a high-tax regime will "destroy wealth" as the wealth "does not get produced in the first place,because high taxes make its production not worthwhile". Over the decades, Malaysia has seen evidence that our policymakers know very well the benefits of a low-tax policy environment. Langkawi is just one example of that. There are many more special tax status measures given to various industries and businesses to stimulate growth and promote investment. Even individuals can get tax exemptions under certain circumstances. It is obvious that the benefit of low taxes is not an alien concept to us. Lowering or even abolishing certain taxes is also a politically popular move. Just look at how popular Pakatan Rakyat's proposal to abolish excise duty on cars is among the voters. It would be foolish for any politician to try to counter this tax reform proposal because it would be akin to saying that the rakyat should continue to be oppressed by high car prices. Perhaps realising this, even some Barisan Nasional politicians are beginning to sound supportive of the idea. As we get closer to the announcement of Budget 2013, I hope the lessons from Langkawi will not be forgotten by those working on the policy. It is time to spread the benefits of lower taxation to a wider section of the rakyat so that the wealth of our nation can be enjoyed by all.
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