PKR think tank suggests tax hikes on millionaires, ‘sin’ companies

BY BOO SU-LYN

OCTOBER 12, 2013

Anti-petrol price increase protest by Solidariti Mahasiswa members at KLCC on Friday, September 6, 2013. — Picture by Saw Siow FengPETALING JAYA, Oct 12 — Millionaires and “sin” companies should be charged higher taxes to help boost the country’s revenue and temper its widening fiscal deficit without adding further burden on the poor, PKR think tank Institut Rakyat has suggested.

Institut Rakyat executive director Azrul Azwar Ahmad Tajudin said minimum taxes of 30 per cent should be imposed on those earning gross annual incomes of between RM1 million and RM10 million, and 35 to 40 per cent above those amounts. 

“To increase the country’s revenue, I propose that we have a special tax rate for those with higher incomes,” Azrul Azwar told a forum on the Auditor-General’s 2012 report here last night.

“The maximum tax rate now is 26 per cent; even those earning less than RM1 million will be taxed that amount,” added the economist.

The maximum 26 per cent tax rate is implemented on chargeable incomes (taxable income deducted by tax exemptions and tax reliefs) of more than RM100,000. 

Azrul Azwar told The Malay Mail Online after the forum about his recommended tax rates for millionaires, which he said was inspired by legendary US investor Warren Buffett, who pushed last November for minimum tax on the affluent. 

Buffett wrote in an editorial for US newspaper The New York Times that more than a quarter of the ultrawealthy – the 400 highest incomes in the United States – paid less than 15 per cent of their average US$202 million (RM642 million) income in 2009 in combined federal income and payroll taxes. 

The businessman had suggested a tax rate of 30 per cent for those earning between US$1 million and US$10 million a year, and 35 per cent on amounts higher than that.

“A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours,” Buffett wrote.

Azrul Azwar also told The Malay Mail Online yesterday that the 25 per cent corporate tax rate should be increased to 30 per cent for gambling, alcohol and tobacco corporations to “diversify the revenue base”.

The economist further said at the forum that Putrajaya should implement a hiring freeze for civil servants and avoid replacing those who retire. 

“The ratio of civil servants to the population in Malaysia is among the highest in the Asia Pacific at 4.7 per cent, compared to 1 to 2 per cent in other countries,” said Azrul Azwar.

“I suggest we freeze pay hikes for ministers and high-ranking civil servants, but increase the salaries of low-ranking civil servants,” he added, noting that emoluments and pensions for government servants make up the biggest portion of the country’s budget at 35 to 36 per cent.

Putrajaya is seeking to introduce the goods and services tax (GST), possibly in the upcoming Budget 2014 that will be tabled on October 25, in a bid to broaden the tax base and narrow the fiscal deficit. 

The federal government has stated that it aims to reduce the fiscal deficit to 4 per cent this year and gradually to 3 per cent by 2015. 

But Azrul Azwar said that although he did not disagree with the principles of the GST, he was concerned that the tax was a “regressive” one that will make low and middle-income earners pay more than the wealthy. 

“The federal government might abuse the GST as a shortcut to increase revenue,” he said.

DAP strategist Ong Kian Ming, who was also at the forum, criticised the government for the wastages revealed in the Auditor-General’s 2012.

The Serdang MP estimated that the overall losses, based on 64 studies done by the Auditor-General, totalled RM6.5 billion.

“It is twice the amount of money that the government says it will save after the fuel price increased by 20 sen,” said Ong.

Opposition Leader Datuk Seri Anwar Ibrahim said at the same forum that state governments should be proud of efficiency, and not a budget surplus, ostensibly referring to Selangor. 

The former finance minister added that spending RM67 million on the Hari Belia 2012 celebration, as revealed by the Auditor-General’s 2012 report, was “sick” and “despicable”.

“People who talk about the Malays, survival of the Malays, supremacy of the Malays are actually robbers, Malay pirates!” Anwar exclaimed.

- See more at: http://www.themalaymailonline.com/malaysia/article/pkr-think-tank-suggests-tax-hikes-on-millionaires-sin-companies#sthash.scuumjid.dpuf