Panel dis­cusses re­duc­tion in in­come tax

The Star Malaysia - StarBiz - - News -

KUALA LUMPUR: The re­duc­tion in in­come tax, the fis­cal deficit and the in­cen­tives an­nounced for small and medium en­ter­prises (SMEs) were among the high­lights of the dis­cus­sion at a 2018 Post-Bud­get Di­a­logue.

Among the pan­elists at the di­a­logue, Ax­ce­la­sia Taxand Sdn Bhd group ex­ec­u­tive chair­man Dr Veerinder­jit Singh said the fis­cal deficit tar­get should be even lower than the 2.8% an­nounced.

“The tar­geted fis­cal deficit is good, at 2.8% but my ques­tion al­ways is – could it not have been even lower?

“If the good times are com­ing then we should be bring­ing down our fis­cal deficit even lower,” Dr Veerinder­jit said in ref­er­ence to the in­creased rev­enue ex­pected from the higher oil prices com­pared to last year.

On as­sis­tance for SMEs, he lauded the many mea­sures an­nounced, but called for guid­ance for the com­pa­nies in ac­cess­ing these funds or in­cen­tives.

“We have talked to SMEs on the ground and many of them still say that they don’t know that there are such grants and funds avail­able.

“A lot more needs to be done in this as­pect, to guide the SMEs and en­sure they ben­e­fit from all these mea­sures,” he said at the 2018 Post-Bud­get Di­a­logue or­gan­ised by the Malaysian Eco­nomic As­so­ci­a­tion here yes­ter­day.

He also dis­agreed with the move to lower in­come taxes for house­holds earn­ing less than RM9,000 a month, which will mean over 260,000 peo­ple will no longer pay taxes.

“If a cer­tain group needs as­sis­tance, it can be done in a more tar­geted way, by pro­vid­ing a re­lief for a year.

“Oth­er­wise we are see­ing a shrink­ing of the per­sonal tax base, and this is not ad­vis­able,” he said.

In the long term, he said, the goal should be to lower cor­po­rate taxes in­stead.

Econ­o­mist Prof Dr Jomo Kwame Sun­daram ques­tioned the sig­nif­i­cant in­crease in the oper­at­ing bud­get for next year, in view of the tar­geted re­duc­tion in the fis­cal deficit to 2.8% from 3.0%.

“Look­ing the numbers, the rev­enue for next year will be about RM240­bil and the ex­pen­di­ture is RM280­bil.

“So there is a gap of about RM40­bil which is about 17% so one won­ders how the gap will be filled.

“Of course the govern­ment has other sources of rev­enue, but the peo­ple would ap­pre­ci­ate greater trans­parency about where this money is com­ing from,” Dr Jomo said.

On the in­creased oper­at­ing ex­pen­di­ture for the year, he added that it was un­clear what ac­counted for the bulk of the in­crease.

“The in­crease is quite sig­nif­i­cant, over RM2­bil – more trans­parency is needed on this as well,” he said.

He also ques­tioned the coun­try’s in­fla­tion fig­ures re­main­ing low de­spite the im­ple­men­ta­tion of the GST, fall in ex­changes rates and rising prices.

“We need a cred­i­ble ex­pla­na­tion with re­gards to the govern­ment data on the in­fla­tion - how has the rate re­mained low de­spite these changes,” he said.

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