by Sharan Raj
The fall in oil prices and exports have hurt government revenue badly. Petroleum revenue may drop up to RM30 billion this year alone. The contribution from the Sales and Services Tax and Tourism Tax will drop significantly due to lower spending and tourist arrivals.
Putrajaya needs new sources of income to fund economic recovery programmes. Bank Negara highlights that most households are highly indebted due artificially lowered wages. Currently, business and labor income is taxable but capital income is tax free.
Hence, Putrajaya needs to tax the super-rich to rebuild Malaysia. The super-rich make up 0.2% of the population but have accumulated the largest share of national wealth in the past decade through generous tax breaks, subsidies, tax cuts and suppressed minimum wages.
According to Credit Suisse Global Wealth Databook 2018, Malaysia is home to 46,215 and 487 high net worth individuals (US$1 million to US$50 million) and ultra-high net worth individuals (more than US$50 million) respectively.
Hence, super-rich and billionaires must accept higher taxes to fund Malaysia during tough times. Malaysia should expand taxable income to include profits from shares, bonds, dividends, fixed deposits, bank interest, golden parachutes, gifts etc.
Capgemini’s World Wealth Report 2019 revealed that the super-rich hold more than 25% of their wealth in cash. A fixed deposit of RM 1 million with minimum 3% interest generates an easy income of RM2,500 per month. That is twice the B40 minimum wage.
Corporate Social Responsibility (CSR) programmes for Covid-19 are rubbish as they are eligible for tax exemption. Hence, CSR is just redistributed public taxes with a bonus of free publicity for corporations. Putrajaya should abolish the tax exemption for CSR, so it is done purely on goodwill.
Parti Sosialis Malaysia (PSM)
Parti Sosialis Malaysia Negeri Melaka (PSM Melaka)