PSM is very concerned that the PN government has plans to resurrect the dead Goods and Services Tax regime to increase government revenue. The Deputy Finance Minister II Mohd Shahar Abdullah, over the past week has repeatedly floated the idea of resurrecting GST. He claims that the GST brought in RM 40 billion a year compared to the SST that only manages to collect RM 21 billion a year.
It’s despicable that the Deputy Minister is even considering the GST in times when the rakyat has lost jobs and income. The GST has proven to be a very regressive tax hitting hard on the working people. It increases their daily consumption cost. When GST was introduced in 1st April, 2015, it clearly led a significant increase on consumer goods prices. Has the PN forgotten that GST was one of the issues that caused the downfall of the Najib government in 2018?
The government’s immediate response to fall back on a consumer tax regime reveals their pro rich mentality that prevents them from even thinking of grazing the wealthy!
Wealth Tax – Has PN the guts to introduce it
Many renowned economists concurred with the idea that the wealthy should contribute more to revive the country out of the Covid19 induced economic crisis. Prof. Jeffrey Sachs, head of the Sustainable Development Solutions Network said that “We will need to tax high-net worth, especially after the current disaster,”
Instead PSM puts a challenge to the PN government to implement the much needed wealth tax. PSM is proposing a progressive wealth tax to cope the shortcoming to government revenue.
Wealth tax is a tax levied on the value of held assets where tax will be applicable to a variety of asset types including cash, bank deposits, shares, fixed assets, personal cars, assessed value of real property, pension plans, money funds, owner-occupied housing, and trusts. We propose this tax only on those that have a declared wealth of RM1 billion and above. It would be a progressive tax starting from 2% up top 10%.
It is calculated proportionately according to the tax bracket that they fall. For example a billionaire with an estimated net wealth worth of RM 4.34 billion, will pay only 2% for the first 2 billion and 4 % for the balance 2.34billion.
Thus if the government taxes the 50 wealthiest Malaysians progressively it will generate approximately RM 20 billion per year from the billionaires. Rest assured that, that no billionaire will be pushed to poverty if the tax system is introduced. With the global economic downturn due to the pandemic, the wealthy have limited avenues to invest in productive capital. Thus it payback time, as they and their business empires have enjoyed various governments business friendly incentives and tax holidays all these years.
We strongly condemn the PN government’s short sighted plan to reintroduce the GST and challenge them to make a bold move and introduce a much needed wealth tax on the Malaysian billionaires!
Secretary General PSM
18th December, 2020.