KUALA LUMPUR: Reworking the taxation system is among the sweeping reforms that the G25 group of prominent Malays proposed in its 92-page report to restore economic confidence.
In the report titled Invigorating Economic Confidence in Malaysia, G25 proposed the tax regime change to a structure more suitable for a high-income economy.
“We propose the Government set up a panel for a public review of the tax system, comprising mainly business leaders and tax experts,” it said.
In addition to calling for a reduction of excise duties and domestic tariffs on cars to help reduce the household debt among the young urban population, G25 noted that the “sin” taxes on liquor and tobacco products were extremely high.
“They have resulted in smuggling and counterfeiting, at a high cost to government revenue.
“These taxes should be reviewed and reduced to make it unattractive for smugglers to operate, as experience elsewhere has shown that such a policy usually leads to larger collections,” it said.
At the report launch yesterday, G25 said the proposals were drawn from existing suggestions by other civil society organisations.
Former assistant governor of Bank Negara Malaysia Datuk Latifah Merican Cheong noted that Malaysia was moving into the technological age and digital economy but its tax system was closer to that of a newly-industrialised country.
Latifah said the tax structure should be re-examined, with the private sector giving its input and being balanced out by an examination by international institutions such as the International Monetary Fund or World Bank.
Other proposals touched on the outsized role of government-linked corporations and investment corporations (GLCs and GLICs) in the economy that impacted the growth of private companies, Latifah said.
The report devoted one section towards closure of 1MDB, saying that even if there were no prosecutions, a full, comprehensive and transparent report on the GLIC’s official status and financial position would quell concerns.
In his opening remarks, former Khazanah Nasional managing director Tan Sri Mohd Sheriff Mohd Kassim said when they began compiling their recommendations, they realised there was also a need for good governance.
“This will create confidence for investors and businesses to continue investing, create more employment opportunities, more wealth, income and social mobility, and create a more balanced social order in Malaysia,” said Mohd Sheriff.
The first part of the report deals with structural economic and workforce issues such as reforming the workforce and foreign labour policies while Part II is about structural and governance reforms.
In Part II, G25 said poor governance has opened the floodgates for endemic corruption at high levels of government and government-linked business entities.
“Malaysia must restore public confidence in good governance practices so that citizens and investors are confident that laws, regulations, procedures and processes will be implemented with appropriate checks and balances,” it said.
Among the proposals was the separation of the prosecutorial functions of the Attorney-General’s post, and vesting them in an independent Deputy Public Prosecutor.
The report also suggested that ministers and senior public officials should declare their assets before being appointed, to guard against conflicts of interest.
For political parties, G25 suggested limits on private funding, whether from entities, individuals and foreign donors.
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