PETALING JAYA: Outstanding tax refunds are a serious matter and the amount owed should be returned in full, instead of via installments, says Datuk Seri Dr Wee Ka Siong.
According to the MCA president, tax collections by the Inland Revenue Board (LHDN) surpassed RM184.8bil last year, but tax refunds were only RM2bil or about 1%.
Dr Wee said this was recently increased to RM4bil earlier this month when Pakatan Harapan suffered heavy losses in the recent Sabah state polls where PKR only won one seat.
“The Prime Minister also said that he will immediately increase government allocations for tax refunds to RM4bil and admitted that the amount is not enough.
“That statement is a clear admission that the issue of backlogged tax refunds is very serious and affects millions of taxpayers.
“This is not a small or technical matter, but it concerns justice to the people because that money isn’t the government’s, and based on the law, it must be returned to the people and companies that overpaid, not based on government allocations or via instalments,” he said.
Dr Wee, in a video posted on social media Wednesday (Dec 17), explained that based on the current mechanism, taxes are deposited into the government’s accounts and LHDN depends on government allocations to pay owed refunds.
According to Dr Wee, the right way to distribute tax refunds is to credit the sum owed to individuals or companies, and the remaining amount is deposited to the government accounts.
“The sum owed should be returned to taxpayers and the balance after the refund is deposited into the government’s accounts,” said Dr Wee.
Dr Wee said Prime Minister Datuk Seri Anwar Ibrahim’s recent remarks strengthen his argument that the LHDN should be a free body reporting directly to Parliament, instead of being under the Finance Ministry.
“This is in line with international practices and as long as the LHDN is placed under the Finance Ministry, there will be a perception that it can be abused as a political tool to punish enemies and pressure critics.
“We don’t want the LHDN to be used as a political weapon. We want it to be a fair, professional and independent institution,” he said
Dr Wee suggested that LHDN increase its annual compensation rate of 2% for late refunds to 4%, or at least 2% higher than the government bond rates which are currently around 4%.
“Because as long as interest rates are low, the government is tempted to use the people’s money to cover up deficits and actual debt.
“When the interest rates are higher, then the government is incentivised to immediately refund the people’s money instead of delaying it for months and years,” he said.
Dr Wee also said the government has to come clean about the total amount owed to businesses and the people, as well as when it could return the sum owed in full.
“This is not about politics, but about the people’s rights and the nation’s fiscal integrity,” he said.
Dr Wee, who is also Ayer Hitam MP, had previously said that he received complaints that LHDN was taking longer than the stipulated time to process refunds, despite guidelines stating refunds should be completed within 30 days of submission.
On Dec 8, Anwar said the tax refund allocation has been increased from RM2bil to RM4bil to expedite outstanding payments to taxpayers, including small businesses.
Anwar, who stressed that the government would not owe money to the people, said the LHDN would begin the phased processing of refunds to eligible taxpayers from Dec 8.
