Most Read
Most Commented
Read more like this
mk-logo
News
Think tank: Tax cuts akin to BR1M
Published:  Oct 28, 2017 12:56 PM
Updated: 5:02 AM

A think tank said that the two percentage point tax cut for those earning between RM20,001 and RM70,000 annually was "poorly designed."

According to the Centre of Public Policy Studies (Asli-CPPS), the tax cuts will see people in this category paying about RM300 to RM1,000 less in taxes.

This will result a drop in collection of roughly RM1.5 billion, said the group.

"However, it is a blanket tax cut, which primarily benefits the upper and middle class as only those earning upwards of RM70,000 annually would be able to enjoy the full RM1,000 tax cut.

"This is a similar amount being given out by BR1M (RM1,200 maximum)," said Asli-CPPS in a statement today.

In view of median personal income being RM20,436, Asli-CPPS argued that the bottom half of salaried workers will not benefit from the tax cuts.

"This policy is poorly designed, mistargeted and deemed regressive as RM 1.5 billion will be channelled to the upper half of Malaysians instead of the bottom half," said the group.

 

Asli-CPPS also warned that Malaysia appears to be trending towards an imbalance in operating and developing expenditure, as only 16 percent of Budget 2018 was allocated to development, down from 27 percent in 2010.

"The government should approach operating expenditure with care as emoluments will increase unsustainably without reforming the civil service," said the group.

Asli-CPPS also expressed disappointment that not enough was promised in Budget 2018 to tackle youth unemployment.

Although there were allocations for Mara-related training programmes, they argued that the policy was not inclusive.

On home ownership schemes, Asli-CPPS disagreed that the government's intention to extend the step-up financing scheme – which typically involves higher interest rates that commercial banks – to private developers could expose homeowners to higher risks.

"Step-up financing requires a high degree of regulation because it involves steep leveraging and could lead to bankruptcy if people are not financially responsible.

"The potential option of withdrawing from EPF accounts is a threat to long-term social security. This policy should be rolled back as it could be easily abused by private developers to issue predatory loans.

"With the vast amounts of money and individual liabilities involved, this could lead to a household debt crisis," said the group.

Meanwhile, Asli-CPPS applauded the move to increase of R&D grants for public universities, emphasis on SMEs, start-ups, bumiputera development and counterterrorism.

Malaysiakini's Budget 2018 microsite

ADS