KUALA LUMPUR — November 1, 2018: Barisan Nasional has proposed ways it thinks will allow the government to recoup the billions it lost to the black economy due to reverting to the Sales and Services Tax (SST).
It also thinks that the suggestions will enable the continuation of the 1Malaysia People’s Aid (BR1M) programme.
The suggestions dubbed the people’s economic initiative include reintroducing the Goods and Services Tax (GST) at a rate of three per cent from the previous six.
“The government lost almost RM30 billions to the black economy and tax cheats when it reverted to SST,” said Rembau MP Khairy Jamaluddin, who is also the BN’s shadow finance minister, in Parliament today.
Malaysia returned to using the SST following Pakatan Harapan victory in the May 9 general elections in which consumer goods, services and items are taxed at 5, 6 and 10 per cent respectively.
According to Khairy, three per cent would net at least RM20 billion, due to it being more efficient and transparent, from Malaysia’s RM30 billion black economy which he said grew as the result of the SST.
The country collected over RM40 billion yearly under the GST in 2016 and 2017 compared to the RM14 billion in 2014 under the SST. It is expected to collect under RM20 billion this year from the SST .
Other measures laid down by Khairy to continue with BR1M, which will be phased out, are charges on foreign workers remitting money home, restructuring the levy for foreign workers and the implementation of soda, carbon, wealth and plastic bag taxes.
Last year, the then BN government allocated RM6.8 billion for BR1M for 7.2 million recipients in the form of cash handouts to households earning less than RM4,000.
On the introduction of remittance charge, Khairy said the government stands to gain RM2.09 billion if the charge is set at six per cent based on the fact that foreign workers had transferred RM34.75 billion from Malaysia in 2015.
“We propose a rate of 25 sen per litre for the soda tax, which will amount to RM360 million per year, as Malaysians drink 1.3 million litre of fizzy drinks a year. But money from this tax must be used for medical purposes,” suggested Khairy.
As for carbon tax, the government stands to gain RM2 billion per year if it charges RM10 per metric tonne to factories producing greenhouse gasses which, according to Khairy, amounts to 256 million metric tonnes a year.
The government may also gain RM1.46 billion if it imposes a 15 sen tax per plastic bag as Malaysians use 9.75 billion plastic bags per year.
“In order to narrow the income gap between the rich, middle income and poor, BN proposes that the government impose a wealth tax for individuals earning more than RM10 million year.
“To prevent speculation on the share market, BN suggests that the government impose tobin tax to any short-term share transactions to prevent the market from being too volatile,” said Khairy.