It’s not a ‘Robin Hood’ budget, says Treasury sec-gen
Budget 2016 must not be regarded as a 'Robin Hood' budget just because the government decides to increase the tax rate of the top 20 percent high-income bracket of Malaysians, as it involves only a small number, says Treasury secretary-general Mohd Irwan Serigar Abdullah.
He said only about RM400 million in revenue would be collected from the move involving some 17,000 taxpayers from a total of over two million.
"The move would not deter foreign investment as it is done in other parts of the world, as well as being recommended by the IMF (International Monetary Fund) and a good thing for countries moving toward advanced economy," he said at the post budget dialogue organised by the Malaysian Economic Association (MEA) in Kuala Lumpur today.
Prime Minister Najib Abdul Razak, in tabling Budget 2016, had announced the proposed taxable income band for the highest tax rate be increased from 25 per cent to 26 per cent for those with an income of between RM600,000 and RM1 million, in an effort to strengthen the tax structure to be more competitive and progressive.
Meanwhile, for those with an income above RM1 million, the tax rate will be increased from 25 percent to 28 percent.
"We consulted many parties and felt that it would balance up, as the top 20 per cent would earn from other incentives like reinvestment allowance, the economic allocation given to infrastructure development, bank sector benefits and services sector benefits," said Irwan Serigar.
Basically, it was a good budget that addressed a balanced approach between the capital and people economy, he said.
"Under this budget, the government is also addressing the middle-income group, as what many people claimed to be neglected in previous budgets besides continuing to address the needs of the Bottom 40 income group," he added.
Earlier at the dialogue, Taxand Malaysia chairperson Dr Veerinderjeet Singh said the move to increase individual tax for the top rate bucked the global trend, as it might send a different message or raise an issue.
"We just need to be mindful as we are not at the same level with developed countries as yet. I'm suggesting that perhaps the government should consider the move to be on a temporary period such as two to three years only," he added.
Bank of America Merrill Lynch's head of Asean economics, Dr Chua Hak Bin, said the increase in tax rate might deter outside talent from coming to Malaysia.
Meanwhile, World Bank country manager Faris Hadad said Budget 2016 was a judicious balance, set to tackle the current situation as well as maintain growth.
- Bernama
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