KUALA LUMPUR: The government plans to collect an additional RM100mil from the higher income tax rate for those earning above RM2mil per year, said Finance Minister Lim Guan Eng.
The government has introduced a new tax rate for those earning above RM2mil at 30%, up from the current 28% rate.
Lim said the new tax band came from a proposal by the World Bank, which suggested a higher rate of 35%.
“The World Bank said our top marginal tax rate for the country is too low compared with other neighbouring countries and advised us to increase it.
“Even by increasing the income tax rate to 30%, Malaysia is still ranked among the lowest compared to neighbouring countries, ” he said at a dialogue session at the Budget 2020 Forum yesterday.
The new tax rate was said to affect 2,000 people.
Lim pointed out that the wealthy should be able to afford the increase in tax, and said the move would contribute to the country’s economic growth.
When asked if the new tax rate would lead to the government implementing wealth or inheritance taxes in the future, Lim said there is no plan for such a tax regime in the near term. “A wealth tax is not on the table at the moment, unless there is a drastic change, ” he said.A wealth tax is a levy on the total value of personal assets, including bank deposits and real estate. Meanwhile, an inheritance tax is a tax paid by a person who inherits money or property from a person who has died.
Lim said among the main objectives of Budget 2020 were to ramp up the country’s digitalisation agenda and getting more graduates into the workforce.
“To spur higher private investment and to upgrade the structure of our economy is for us to fully embrace the digital economy.
“Private sector adoption of the latest technologies can bring significant breakthroughs for Malaysia, but it also requires significant upfront investments in infrastructure and the accompanying ecosystem, ” he said in his welcoming speech.
“The private sector cannot do this alone. Selective state intervention is required to improve competitiveness, prioritise investment in strategic areas and structure incentives around industrial policy goals, ” he added.
When asked why the government is incentifying the equity crowdfunding (ECF) and peer-to-peer (P2P) platforms, Lim said the effort is also to encourage more innovations in the financial system.
“It is not just about having more platforms, but we also want to encourage the technology development behind it. We should have a liberalised but regulated financial system, ” he said.
On the country’s largest toll concessionaire PLUS Malaysia Bhd, Lim reiterated that the government is open to any parties that want to take over the highway, so long as it doesn’t impact the government’s debt service charge as well as savings for road users.
Last Friday, Lim announced that the government is giving 18% discount on the toll rates on all highways owned by PLUS.
In his Budget 2020 address, he said the discount will result in RM1.13bil in savings for highway users in 2020, and up to RM43bil over the entire concession period until 2038.
At the moment, Khazanah Nasional Bhd controls a 51% stake in PLUS, while The Employees Provident Fund (EPF) owns the remaining 49%
On another matter, Lim stressed that the previous government has “stolen” the fund that was supposed to be a refund to businesses for the goods and services tax (GST).
“The special dividend of RM30bil from Petronas is a one-off dividend to the government to pay GST tax refunds, ” he said. “Most importantly, the government had refunded what businesses had not been able to get back for the past five years. But why was this not highlighted?” he said when asked by the moderator if the government would not “raid” Petronas again.
Last year, Lim claimed the RM19.4bil GST refunds was “stolen” by the former Barisan Nasional administration.
However, the Public Accounts Committee which looked into the issue said no refunds were missing.
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