Reduction in personal income tax to result in RM1.3 bln loss to govt

KUALA LUMPUR: The 2.0 percentage-point reduction in individual income tax rate as announced in Budget 2018 last week, would reduce government revenue by RM1.3 billion, says Second Finance Minister Datuk Seri Johari Abdul Ghani.

Nevertheless, he was confident the country’s economy would continue to be stimulated through the government’s planned expenditure.

“We (government) are confident the country’s economic growth can be sustained. Rating agencies, the International Monetary Fund and World Bank are still giving positive projections, in terms of economic growth in 2018, for the entire world and Malaysia.

“Being an open economy, if the global outlook is good, then it also good for us too. With economic growth, we should be able to collect higher revenue,” he told reporters after launching the National Tax Seminar 2017 organised by the Inland Revenue Board (IRB) yesterday.

Meanwhile, on the abolishment of toll collection on four highways, effective Jan 1, 2018, Johari said the government would fork out RM102 million in compensation to highway concessionaire, PLUS Malaysia Bhd (PLUS), for terminating toll collection at the Batu Tiga and Sungai Rasau express- ways, and about RM8 million at Bukit Kayu Hitam, in Kedah.

Compensation for abolishing the toll on the Eastern Dispersal Link expressway in Johor, managed by Malaysian Resources Corporation Bhd, was estimated to cost about RM70 million, annually, he added.

Asked whether toll collection would be abolished, nationwide, Johari said the government needed to be prudent in making such a decision as it depended on its financial capability.

“If we look at PLUS today, the company has a liability of close to RM30 billion in terms of bond issuance.

“Hence, we cannot simply do away with toll collection entirely as it would adversely affect government spending in public health, education, and much more. We need to strike a balance,” Johari said.

Earlier, in his speech, he urged professional bodies and tax practitioners to seek clarification from the IRB if they were unclear of any laws concerning taxation.

“This is important because as tax advisors, any misinterpretation of tax laws, on their part, would result in incorrect tax payment, which in turn, would cause their clients to incur unnecessary tax arrears or surplus,” he said. — Bernama