Economists, calling Malaysia’s system regressive, suggest tax hike as necessary to fund 12MP projects
.jpg)
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz told Parliament last week that government debt would be estimated at over RM1 trillion by the end of the 12th Malaysian Plan’s term in 2025. — Picture by Yusof Mat Isa
KUALA LUMPUR, Oct 14 — Three prominent economists would like to see the federal government raise taxes as a way to fund development and fix an economy devastated by Covid-19.
Support for new taxes, particularly on Malaysia’s wealthy and businesses that have profited massively during the height of the pandemic, have been floated in Parliament and public platforms in recent days.
The idea has become the centrepiece of a policy debate around how to fund the RM400 billion of development expenses under the five-year 12th Malaysian Plan, tabled in the Dewan Rakyat last week.
Former Asian Development Bank economist Jomo Kwame Sundram, one of three panelists speaking at an online forum organised by the Malaysian Institute of Economic Research today, said tax reform was long overdue.
“The best time to raise the tax rates is now because it won’t pinch,” he said.
“Most companies except for a few who should be [slapped with a windfall tax] are not making big money and so they don’t feel the tax rate.
“And there’s another compelling reason: the world tax regime is changing,” he added.
In June, the G7 nations agreed in principle to enforce a minimum corporate tax threshold of 15 per cent in a bid seemingly aimed at targeting the world’s richest multinational corporations that have been accused of tax avoidance.
The agreement, touted as a game changer that could rein in capital flight, may see governments enforce plans to make multinationals pay more tax in countries where they operate, rather than where they are headquartered.
Jomo said the G7 pact, along with other developments, signalled a global appetite to fix tax avoidance, and that Malaysia should act on it.
“The Treasury secretary to US President Joe Biden has already announced a corporate tax for Google so if you give a tax break, it’s nothing, they still have to pay the tax just that they have to pay it to somebody else,” he said.
“So what’s the point of giving them a tax break? We really need to think about our tax strategy overall.”
Muhammed Abdul Khalid, the economist who led various key researches on poverty and inequality, said the Malaysian tax system is regressive, and a reflection of poor fiscal management.
At the forum, he criticised the government’s hesitancy to impose a windfall tax on industries that profited during the pandemic, such as the rubber glove industry.
Some of the sector’s leading players, like Top Glove — which is the world’s largest producer of rubber gloves — made record profits of up to RM7.5 billion for the financial year 2020 on the back of surging demand for surgical gloves as public health authorities around the world scrambled to treat Covid-19 patients.
“We have a serious issue in managing our finances. Our tax system is regressive, our spending is also regressive. And when we talk about funding the 12MP, the RM400 billion has to be borrowed and it has to be done optimally,” Muhammed said.
“For example, we can impose a windfall tax on selected industries and we have been doing this for the last 20 years, why is it that some other industries are special?” he asked.
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz told Parliament last week that for the 12MP, government debt would be estimated at over RM1 trillion by the end of the plan’s term in 2025.
Nungsari A. Radhi, an economist and former Balik Pulau MP, told the forum incurring debt isn’t the problem. Instead the concern should be on the plan’s lack of clarity about how the money would be spent.
“We have to borrow, there is no question that we have to borrow. But while we are borrowing and we are incurring debt for future generations... we have to make sure that we are spending the money to generate growth,” he said.
KUALA LUMPUR, Oct 14 — Three prominent economists would like to see the federal government raise taxes as a way to fund development and fix an economy devastated by Covid-19.
Support for new taxes, particularly on Malaysia’s wealthy and businesses that have profited massively during the height of the pandemic, have been floated in Parliament and public platforms in recent days.
The idea has become the centrepiece of a policy debate around how to fund the RM400 billion of development expenses under the five-year 12th Malaysian Plan, tabled in the Dewan Rakyat last week.
Former Asian Development Bank economist Jomo Kwame Sundram, one of three panelists speaking at an online forum organised by the Malaysian Institute of Economic Research today, said tax reform was long overdue.
“The best time to raise the tax rates is now because it won’t pinch,” he said.
“Most companies except for a few who should be [slapped with a windfall tax] are not making big money and so they don’t feel the tax rate.
“And there’s another compelling reason: the world tax regime is changing,” he added.
In June, the G7 nations agreed in principle to enforce a minimum corporate tax threshold of 15 per cent in a bid seemingly aimed at targeting the world’s richest multinational corporations that have been accused of tax avoidance.
The agreement, touted as a game changer that could rein in capital flight, may see governments enforce plans to make multinationals pay more tax in countries where they operate, rather than where they are headquartered.
Jomo said the G7 pact, along with other developments, signalled a global appetite to fix tax avoidance, and that Malaysia should act on it.
“The Treasury secretary to US President Joe Biden has already announced a corporate tax for Google so if you give a tax break, it’s nothing, they still have to pay the tax just that they have to pay it to somebody else,” he said.
“So what’s the point of giving them a tax break? We really need to think about our tax strategy overall.”
Muhammed Abdul Khalid, the economist who led various key researches on poverty and inequality, said the Malaysian tax system is regressive, and a reflection of poor fiscal management.
At the forum, he criticised the government’s hesitancy to impose a windfall tax on industries that profited during the pandemic, such as the rubber glove industry.
Some of the sector’s leading players, like Top Glove — which is the world’s largest producer of rubber gloves — made record profits of up to RM7.5 billion for the financial year 2020 on the back of surging demand for surgical gloves as public health authorities around the world scrambled to treat Covid-19 patients.
“We have a serious issue in managing our finances. Our tax system is regressive, our spending is also regressive. And when we talk about funding the 12MP, the RM400 billion has to be borrowed and it has to be done optimally,” Muhammed said.
“For example, we can impose a windfall tax on selected industries and we have been doing this for the last 20 years, why is it that some other industries are special?” he asked.
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz told Parliament last week that for the 12MP, government debt would be estimated at over RM1 trillion by the end of the plan’s term in 2025.
Nungsari A. Radhi, an economist and former Balik Pulau MP, told the forum incurring debt isn’t the problem. Instead the concern should be on the plan’s lack of clarity about how the money would be spent.
“We have to borrow, there is no question that we have to borrow. But while we are borrowing and we are incurring debt for future generations... we have to make sure that we are spending the money to generate growth,” he said.
Why are some people so special that the gomen is reluctant to tax them, give them special privilege, no need to pay but can challenge this challenge that up to Federal Court, refer to Constitution, but ordinary folk have to pay LHDN first talk later?
ReplyDeleteQUOTE
Najib and son Nazifuddin file bids for Federal Court appeal over tax suits
By NURBAITI HAMDAN
NATION
Tuesday, 14 Sep 2021
KUALA LUMPUR: Former prime minister Datuk Seri Najib Razak and his son Datuk Mohd Nazifuddin have filed leave applications to appeal at the Federal Court in relation to tax suits where the two were ordered to pay RM1.69bil and RM37.6mil respectively to the Inland Revenue Board (LHDN) in tax arrears.
Lawyer Muhammad Farhan Muhammad Shafee confirmed that the leave applications were filed on Monday (Sept 13).
In the notice of motion for Najib, the appellants seek to raise nine questions of law to be brought before the apex court.
One of the questions was on whether Section 106(3) of the Income Tax Act 1967 contravenes Article 121 of the Federal Constitution.
UNQUOTE
Why are all the GST sapoters so quiet? Beating around the Bush? Go On, Just re-introduce the Best and Fairest Tax system ever, practiced by 500 countries worldwide, even with the pandemic no country abolished it, so it must be good, it's not a Fair Weather Tax. So Good there is no escape; rich, poor, unemployed, everybody must pay.
ReplyDeleteYes they should reimpose GST for the reasons you mentioned. There are few downsides chiefly it is a regressive tax hitting b40 more as a pct of income. However this can be addressed by targeted income support like BR1M. Overall the benefits more than compensate for the downsides.
DeleteClearly the LHDN was used by PH for political persecution. Where the heck are Bershit? If Najib really had to pay that sort of income tax (RM1.7bn) he would be one of the richest people in Malaysia. Nowhere does he apoear in any list of the richest Malaysians. He is not on any list but Dr M's sons are. So bad as he is Dr M is worse.
ReplyDeleteThe 4 Billion from KWAP transferred to SRC under Jibby still missing overseas. Even after it went missing Jibby (i) did not make a polis report and (ii) did not allow the Second Finance Minister to go to Switzerland to look for it.
DeleteQUOTE
Judge asks what happened to the RM4b loan granted to SRC, Najib's lawyer replies 'no one knows'
Hafiz Yatim & Izzul Ikram
theedgemarkets.com
April 08, 2021
PUTRAJAYA (April 8) : A Court of Appeal judge today questioned Datuk Seri Najib Razak's lawyer on the status of the RM4 billion loan granted by Retirement Fund Inc (KWAP) to SRC International Sdn Bhd in 2011 and 2012, and was told "no one knows".
Justice Datuk Vazeer Alam Mydin Meera posed the question to counsel Harvinderjit Singh, in the wake of questions raised on the huge sums granted to SRC by KWAP on two occasions which were immediately transferred out of the country.
“We only know that the sum of RM2 billion came in August 2011 and on the same day, it was transferred out, and similarly in March 2012, another RM2 billion came in and it was transferred out," Harvinderjit said. “We know roughly that RM1.8 billion was transferred out in the first instance, and possibly the same in the second, for investment. As to what is the status of the fund now, we do not know and there was no evidence before the court or anyone who came to court to say what the status is,” he said.
He added that the transfer of the money did not go through the SRC board.
“We do not know who approved it (the transfer of the funds overseas). Any act of removing the RM4 billion is theft. To say it was theft is also difficult as there was no police report lodged over the transfer of funds. We do not know its status,” said Harvinderjit.
Besides Justice Vazeer, the other members of the bench are Justice Datuk Abdul Karim Abdul Jalil, who leads the bench, and Justice Datuk Has Zanah Mehat. It was previously reported that the transfer of funds were made through a secret SRC International account and not via its normal account. The signatory of the secret account was SRC's former managing director Nik Faisal Ariff Kamil, who is now outside the country and is being sought by the authorities. Former SRC International chairman Tan Sri Ismee Ismail had testified in the trial at the High Court that he knew the existence of the account sometime later, after he was appointed to the board. Trial judge Justice Mohd Nazlan Mohd Ghazali also referred to this matter in his judgment.
“It should also be mentioned that testimonies of witnesses reveal that the significant bulk of the RM4 billion drawn down to SRC by KWAP was almost immediately upon receipt transferred to accounts outside the country, and which now appeared to have been frozen by the relevant authorities in Switzerland. Its present status is not made clear in this trial,” he stated.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah testified during the trial that he had tried to retrieve the funds that were allegedly frozen in Switzerland but was prevented to do so by Najib.
UNQUOTE
The basic facts of Income Tax law is that if you received the money (personal, not business transaction - those are a matter of profit and loss) , you are liable for the tax.
DeleteUnless you donated it to an approved Organisation - prove it.
These laws apply to you and I. Why should Najib be exempt ?