Three economists have suggested taxes on the rich via share dividends, capital gains and individual income which they say could provide greater amounts of government revenue without re-introducing GST (goods and services tax).

Barjoyai Bardai of Universiti Tun Abdul Razak called for a double taxation approach for corporate income, Yeah Kim Leng of Sunway University proposed a capital gains tax on unlisted shares, and Lai Wei Sieng of Universiti Kebangsaan Malaysia said tax rates for those in high income brackets should be raised.

Barjoyai said a change in taxation policy on company profits while retaining the existing sales and service tax would be more beneficial than bringing back GST which was abolished in 2018.

The reintroduction of GST has been urged by some groups making suggestions for next year’s federal budget. Barjoyai said GST was likely to yield a marginal increase of RM8 billion annually.

However, if taxes were imposed on dividends paid to shareholders of listed companies, “I think they will easily generate RM50 or 60 billion in tax immediately,” he told FMT.

Barjoyai said the corporate income tax in Malaysia works on a single tax basis. “We tax the company’s profits. But when the company distributes the profits to shareholders, it is not taxed any more,” he said. However, the rest of the world place taxes on the company as well as on shareholders.

The policy allows about 100,000 families to live without paying any income tax despite living on income from dividends. “So they are rich, but have never (had to pay) tax all their lives,” he said, adding that such “discrimination” that favoured the rich should be halted.

Trending  Sanusi Screw-up : PAS Will Pay The Price For Provoking Malays To Rebel Against Sultan Selangor

Yeah said that the proposed inclusion of a capital gains tax on unlisted shares, as stated in the revised 2023 budget, could offer an additional avenue to boost revenue.

However, he said that improving the efficiency of tax collection and government spending can achieve a significant contribution to government revenue.

“Revenue enhancement measures will have to be accompanied by efforts to increase spending efficiency and allocating appropriately to various spending needs with greater market buy effect. That means more efficient resource allocation of revenue to various users,” said Yeah, who is also part of a team set up to advise prime minister Anwar Ibrahim as finance minister.

Lai suggested that the personal income tax rate be raised for the top 10% of society and a higher company tax rate for multinational companies. He also advocated greater investment in a variety of financial instruments, including stocks, bonds, and other securities.

Source : FMT

Subscribe To Our Telegram Channel :
The Coverage Malaysia
Share: