The government must find ways of plugging the hole of reduced revenues to the tune of RM30 billion in the oncoming budget, a member of parliament told Business Today.
MP of Subang Wong Chen says that it expects a reduction in revenues from corporate tax and lesser income tax revenues and this would weigh into the government to look at new sources of income.
“After months of lockdown, the government will find it difficult to raise enough corporate and personal income tax and would have to find other means to make up for the shortfall in revenues,“ he says.
He adds that the government should also put efforts in reducing the operating expenditure with fewer wastage and losses, by deploying better and more transparent procurement policies.
In addition, Wong says the government could also raise more bonds and squeeze more dividends from government-linked companies such as Petronas.
Wong Chen also says that the government will probably consider new taxes such as inheritance tax and capital gains tax.
Analysts and tax experts had chimed in to say that it is unlikely that the government can afford to increase taxes considering it would exacerbate the people’s woes nor can it reduce tax as the government revues had fallen drastically
Finance Minister Tengku Zafrul said that Malaysia can’t afford a cut in corporate tax, which is currently at 24% unless the country’s tax base is broadened and the country maintains a stronger-than-average growth trajectory.
Zafrul said that corporate income tax represents a big chunk of the federal government’s revenue of approximately 32.8% including petroleum income tax, added with the widening fiscal deficit which is expected to be around 6.5% this year due to the pandemic.
