INTRODUCE wealth tax instead of punishing the already struggling general populace by reintroducing the Goods and Services Tax (GST).

“It’s despicable the Government is even thinking about bringing back the GST when a lot of people have lost jobs and had their salaries slashed.

“The GST has proven to be a regressive tax, hitting hard on the working class. It increases their daily consumption cost. When it was introduced in April 2015, it led to an increase on consumer goods prices.

“Has the Perikatan Nasional Government forgotten that GST was one of the reasons why the previous Barisan Nasional Government was voted out?” Parti Sosialis Malaysia (PSM) secretary-general A Sivarajan told FocusM.

Recently, Deputy Finance Minister Mohd Shahar Abdullah told the Dewan Rakyat that the Government was contemplating the idea of reintroducing the GST to increase Government revenue.

He said that GST brought in RM40 bil in revenue in the past, as opposed to the RM21 bil a year the current Sales and Sales Services Tax (SST) generates.

However, several experts have cautioned the Government on any ideas of introducing a new tax, especially during an economic downturn.

The wealthy should chip in during downturn

On the wealth tax, Sivarajan said that many renowned economists have clearly indicated that the wealthy should contribute more to help rejuvenate the economy, especially during a downturn.

He added that Sustainable Development Solutions Network head Prof Jeffrey Sachs had said: “We will need to tax high-net worth, especially after the current disaster.”

“Wealth tax is levied on the value of held assets, where it 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 to be imposed only on those that have a declared wealth of RM1 bil and above. It would be a progressive tax starting from 2% to 10%.

“It is calculated proportionately according to the tax bracket they fall into. For example, a billionaire with an estimated net wealth worth of RM 4.34 bil will pay only 2% for the first RM2 bil and 4 % for the balance RM2.34 bil.

“The question now is whether the Government has the guts to tax the rich instead of falling back on a consumer tax regime,” said Sivarajan.

On arguments that a wealth tax was akin to “punishing” the successful, Sivarajan said that people should ditch the idea that the rich became successful solely on their own effort.

“In most nations like Malaysia, the Government gives businesses generous tax breaks and incentives to help them grow. So to say they became successful on their sole effort is a myth.

“Just as the Government has the power to give them such perks, the same Government has the authority to tax their wealth,” said the PSM leader.

In addition, Sivarajan said the wealth tax would only affect to the top-tier super rich, not the middle-range people who build their wealth using savings, property purchases and others.

Elaborating, he said that the Government usually imposes taxes for three reasons, which are to generate revenue, deter people from purchasing certain goods and services and for items used beyond necessity, such as luxury items.

“For example, the sin tax imposed on cigarettes. It is to deter people from purchasing them.

“And for those items categorised as beyond necessity, if you choose to purchase a luxury item instead of an affordable one, then you are levied for it.

“But the problem with consumption tax like GST is that you get taxed even for necessities. Imagine being taxed for buying milk powder for your children? It’s different scenario altogether,” Sivarajan added. – Dec 19, 2020

https://focusmalaysia.my/mainstream/psm-drop-gst-idea-wealth-tax-a-better-option/