LETTER | I refer to the statement by the finance ministry on new taxes and I was thinking what is the difference in introducing new taxes and replacing the GST with the SST?
I hope the new taxes will be more specifically oriented to a targeted group and reflect an income derived from business adventures e.g. profits instead of a consumption-based approach. We have been suffering the GST since the year 2014 and pray for a break from having new taxes especially on people like us who are mainly in the employment sector.
I wish to propose that the government considers business models and the economy's structure before introducing new taxes. I observed that Malaysia is moving towards:
1. Digital Tax - Online sales either through Facebook and apps that will replace retail sales. Surely in the long term, this will dampen retail outlets and the shopping mall industry thus affecting employment opportunities. Therefore I urged the government to introduce a digital tax on sales made through social media platforms.
2. Carbon and Environment Tax - I personally think applying a standard corporate tax rate is not reflective. Tax is imposed as a result of profit made but it should be reflective on the impact it brings to the business and economy.
For example, a plastic industry employing let say 10 staff generates a profit of RM500,000 per annum but the negative impact it creates to the environment such as wastage and health issues is not justifiable by merely it paying a 20% tax rate.
3. Super Wealth Tax - Those owning more than, let's say 10 properties or who at least have a net worth RM10 million, will have to pay a super-wealth tax. The current income tax rate is derived based on employment income and not passive income.
4. I am strongly against imposing a capital gains tax on share trading. This is because share trading sometimes involves retirees and pensioners who trade in small volumes and sometimes suffer losses. They will be taxed on their gains but how are they to offset this against their losses in share
trading? At this moment, Malaysia is not ready for capital gains tax.
5. The banking industry is making billions and moving towards online transactions. Meaning they are not employing a sizeable workforce but smaller high-quality talented teams. Also, the banking sector enjoys a significant increase in the non-interest income segment which does not reflect risks and rewards taken.
Net profit should reflect the risks and rewards taken by an entrepreneur, however, non-interest income reflects services undertaken by the bank in exchange for money. In conclusion, the banking sector should pay a higher corporate tax rate for their non-interest income segment.
6. Based on data from Wikipedia, Malaysia spent around RM24.5 billion in oil subsidies for a population of 28.3 million indicating a subsidy per person of around RM968 which is too high and excessive. Cars belonging to a company earning hundreds of millions may also be using the subsidised RON95.
In view of this, the oil subsidy should be individual-based. Meaning any person who wants to enjoy the subsidy must be registered with the authority. Those who want to enjoy the oil subsidy must insert their MyKad and a subsidy will be given.
This is to prevent smuggling activities and excessive usage. Some people are using public transport, therefore, the oil subsidy should be a reducing trend instead of an increasing trend in terms of quantity. If that is so, it distorts and hinders the government's efforts at improving public transport.
7. If taxes are to be imposed on cars entering a city, it should be applied consistently across all cities in Malaysia instead of in KL only. Also, Malaysia's road system is not well-connected e.g. when going to Kepong there are two routes either through PJ or KL.
If one uses the KL route, one may need to pay some tax to avoid congestion. But this will congest the PJ route making the KL route empty. And what if accidents and floods happen along the PJ route during that time? The traffic jams will be a nightmare.
Therefore, I appeal to the government to give a clearer clarification on the new taxes to be implemented so that the rakyat can provide their input for our new friendly government.
This rather than hinting at this and that as this will cause shock and worry among the people including reducing our consumption for savings and etc.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.