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

Income tax reduction unlikely after GST implementation - Bernama

OCTOBER 12, 2013

Any reduction in personal and corporate income tax is unlikely in the near term following implementation of the goods and services tax (GST), due to uncertainty in the global and local economies, as well as adaptation of local businesses to the new tax structure.

Tax and Malaysia chairman Dr Veerinderjeet Singh said Malaysia is currently in a period of uncertainty, and it was not the right time to reduce income tax, even with the GST in place.

"I hold the view that you should not be reducing the income tax now. If you look at the statistics, we are having a fiscal deficit without a booming economic climate, while expecting slower growth this year.

"It is better to wait and clear the other issues first, such as reviewing the incentives structures for the future," he added.

He told reporters this after presenting a paper, GST: The Good, The Bad and The Ugly, at a seminar organised by the Malaysian Economic Association yesterday.

Veerinderjeet said lower income tax would attract more businesses to Malaysia, but due to the current global economic situation, the desired effect is unlikely to happen or might be less than expected.

He said while pursuing the 2020 vision, the country still lacks a tax system that is equivalent to the developed nations.

"We need to look at that and not do things on an ad hoc basis (such as) reducing it (income tax), because the people want it.

"You (government) have to reduce income tax, if you think in the long-term it will benefit the country," he added.

Asked about the GST, he said it would probably take effect in 2015 if implemented, with the necessary procedures in place on educating the people, which takes at least a year.

"Eventually, if the GST is introduced in 2015, you need to give it a couple of years to stabilise and subsequently, you can increase the rate and bring down the income tax," Veerinderjeet said.

It is anticipated that the GST may be announced in the Budget 2014 on October 25.

The GST was first tabled in Parliament on December 16, 2009, to replace the existing Sales Tax and Services Tax, but withdrawn last year for amendments.

The broad-based multi-staged consumption tax or value added tax is imposed on the supply of goods and services and is aimed at curbing tax evasion. - Bernama, October 12, 2013.

Income tax reduction unlikely in near term after GST implementation

11 October 2013| last updated at 08:58PM

KUALA LUMPUR: Any reduction in personal and corporate income tax is unlikely in the near-term following implementation of the goods and services tax (GST), due to uncertainty in the global and local economies, as well as adaptation of local businesses to the new tax structure.

Taxand Malaysia Sdn Bhd chairman Dr Veerinderjeet Singh said Malaysia is currently in a period of uncertainty, and it was not the right time to reduce income tax, even with the GST in place.

"I hold the view that you should not be reducing the income tax now. If you look at the statistics, we are having a fiscal deficit without a booming economic climate, while expecting slower growth this year.

"It is better to wait and clear the other issues first, such as reviewing the incentives structures for the future," he added.

He told reporters this after presenting a paper, "GST: The Good, The Bad and The Ugly", at a seminar organised by the Malaysian Economic Association here today.

Veerinderjeet said lower income tax would attract more businesses to Malaysia, but due to the current global economic situation, the desired effect is unlikely to happen or might be less than expected.

He said while pursuing the 2020 vision, the country still lacks a tax system that is equivalent to the developed nations.

"We need to look at that and not do things on an ad hoc basis (such as) reducing it (income tax), because the people want it.

"You (government) have to reduce income tax, if you think in the long-term it will benefit the country," he added.

Asked about the GST, he said it would probably take effect in 2015 if implemented, with the necessary procedures in place on educating the people, which takes at least a year.

"Eventually, if the GST is introduced in 2015, you need to give it a couple of years to stabilise and subsequently, you can increase the rate and bring down the income tax," Veerinderjeet said.

It is anticipated that the GST may be announced in the Budget 2014 on Oct 25. 

The GST was first tabled in Parliament on Dec 16, 2009, to replace the existing Sales Tax and Services Tax, but withdrawn last year for amendments.

The broad-based multi-staged consumption tax or value added tax is imposed on the supply of goods and services and is aimed at curbing tax evasion. --BERNAMA

Read more: Income tax reduction unlikely in near term after GST implementation - Latest - New Straits Times http://www.nst.com.my/latest/income-tax-reduction-unlikely-in-near-term-after-gst-implementation-1.373680#ixzz2hebJdbl1

GST unlikely to reduce budget deficit in near term

Posted on 14 October 2013 - 05:37am

Liew Jia Teng

sunbiz@thesundaily.com

KUALA LUMPUR (Oct 14, 2013): The full impact of the goods and services tax (GST) will not be immediate and is unlikely to reduce Federal budget deficit in the near-term on the back of continued spending of the 1Malaysia People's Aid (BR1M) cash aid initiative for the low-income group, said Taxand Malaysia Sdn Bhd chairman Dr Veerinderjeet Singh.

A budget deficit means that the government spends more money than it receives.

Veerinderjeet estimates that an initial revenue-neutral rate of 4% for GST will generate RM18 billion in tax revenue, which is about the same amount of tax revenue (RM16 billion to RM17 billion) collected from the existing sales tax and service tax of 7%.

"We don't see the country's tax revenue surging overnight as the full impact of the GST is only expected to start in 2015. But eventually, as the rate of GST increases, it should bring in tax revenue faster," he told reporters after presenting a paper on "GST: The Good, The Bad and The Ugly" at a seminar organised by the Malaysian Economic Association here on Friday.

He believes that a GST rate of 7% would "wipe out" the national budget deficit within a year.

Veerinderjeet is of the view that personal and corporate income tax should not be reduced immediately following the implementation of the GST, due to uncertainty in the global and local economies, as well as adaptation of local businesses to the new tax structure.

"We are now in a period of uncertainty, and this is not the right time to reduce income tax, even with the GST in place. The tax system is not mature, you can't be sure if you can collect the revenue (from GST) efficiently," he said.

"So it is better to wait and clear the other issues first, such as reviewing the incentives structures for the future," he added.

Veerinderjeet stressed that the government needs to look at the long term benefits to the country, and not to reduce the income tax on an ad hoc basis just because the people want it.

Income tax cut unlikely in near term with GST

Published: Saturday October 12, 2013 MYT 12:00:00 AM 

Updated: Saturday October 12, 2013 MYT 7:28:50 AM

KUALA LUMPUR: Any reduction in personal and corporate income tax is unlikely in the near term following implementation of the goods and services tax (GST), due to uncertainty in the global and local economies, as well as adaptation of local businesses to the new tax structure.

Taxand Malaysia Sdn Bhd chairman Dr Veerinderjeet Singh said that Malaysia was currently in a period of uncertainty and it was not the right time to reduce income tax, even with the GST in place.

“I hold the view that you should not be reducing the income tax now. If you look at the statistics, we are having a fiscal deficit without a booming economic climate, while expecting slower growth this year.

“It is better to wait and clear the other issues first, such as reviewing the incentives structures for the future,” he added.

He told reporters this after presenting a paper, GST: The Good, The Bad and The Ugly, at a seminar organised by the Malaysian Economic Association in Kuala Lumpur yesterday.

Veerinderjeet said lower income tax would attract more businesses to Malaysia, but due to the current global economic situation, the desired effect was unlikely to happen or might be less than expected.

On GST, he said it would probably take effect in 2015, if implemented, with the necessary procedures in place on educating the people, which takes at least a year. — Bernama

GST provides better clarity than sales tax, says expert - Bernama

OCTOBER 11, 2013

The introduction of the goods and services tax (GST) will provide better clarity to the buyers instead of the sales tax, said Taxand Malaysia chairman, Dr Veerinderjeet Singh.

Veerinderjeet said the sales tax, imposed at the manufacturer's level, was very opaque and most of the people didn't realise it was imposed on them even though most of the goods carried the tax.

"It has always been there, hidden from us," he said at a seminar, entitled GST: The Good, The Bad and The Ugly, organised by the Malaysian Economic Association, in Kuala Lumpur today.

He said among other weaknesses of sales tax and services tax were that there were too many exemptions and revenue collection was low.

GST, however, has been implemented in 160 countries and worked well in many jurisdictions, he said.

Veerinderjeet said the new tax structure would also provide a stable long-term source of tax revenue for the country.

Veerinderjeet said the GST, once implemented at a revenue-neutral rate of 4%, was estimated to rake in a revenue of RM18 billion, which was quite similar to the current revenue of RM16 billion to RM17 billion from sales and services taxes at an average rate of 7%.

GST, a broad-based consumption tax, or value-added tax, was first tabled at the Dewan Rakyat in December 16, 2009 to replace the existing sales and service taxes but was withdrawn last year for amendment.

The multi-staged transaction-based tax structure, imposed on the supply of goods and services, was mooted to help the government curb tax evasion. - Bernama, October 11, 2013.