The Pillars For A Balanced Tax Reform


 

From Carmelo Ferlito
Finance minister Tengku Zafrul Aziz announced that the government is considering a windfall tax and a capital gains tax to support federal revenues in times of difficulty.

However, I believe that Putrajaya needs to holistically think about a tax reform that can support government revenues without undermining growth or discouraging private investments.
Any tax reform needs to have little distortion as possible for economic activity. It has to nudge in favour of a saving-oriented mentality, and it has to keep the investment pace from both overheating and depressing.
We at the Center for Market Education (CME) suggest the following pillars for a balanced tax reform.
1. Reducing income tax and shifting toward a consumption tax
CME believes that the key driver for sustainable growth is private investments and therefore, suggests the government spur them by launching a commitment signal in the form of a moderate income tax reduction.
While CME advocates a shift toward indirect taxation (as explained by the GST proposal below), the shift must be accompanied by the higher standards of enforcement – both for direct and indirect taxes – and by the reduction of unnecessary government expenditure.
2. Introducing a targeted goods and services tax (GST)
The reduction of the income tax should be partially replaced by a consumption tax. The case for a consumption tax mainly lies in the possibility of stimulating household saving in a country that is burdened by a very high household debt.
Against potential regressive effects, we suggest a progressive consumption tax.
CME proposes the following:
exempted goods – items related to the basic consumption habits of the lower-income population, such as rice;low-rate GST (3%) – key-development items such as culture and education-related goods;middle-rate GST (6%) – all the goods not identifiable with the other three categories;high-rate GST (10%) – luxury goods.The GST reintroduction can become an occasion to test the possibility of a higher degree of tax devolution, with the local states more involved in tax collection so that they may have more direct access to funds that can be used to support them.
Hence, we also propose the T-GST to be collected by the state, 20% of which is retained by the state, and 80% transferred to the federal government.
3. A special scheme for microbusinesses
Microbusinesses can be supported in exiting the shadow economy with a special accounting and tax system, whereby a flat and low tax is applied on the self-declared turnover, while most of the accounting and reporting burdens are waived.
4. The special purpose tax for Covid-19
Given the fiscal deficit that has increased substantially due to the allocations required for the Covid-19 pandemic, we propose a special purpose tax (SPT) of 5% to be imposed in Malaysia on taxable profits of corporations above a specified threshold.
Such a tax should be imposed for a two-year period for the assessment years 2021 and 2022 and removed after that. The limited temporal framework needs to be clearly defined as part of a sort of new social pact between the government and the people, whereby the former demands special effort from some of its taxpayers, but it commits to fighting Covid-19 with these additional revenues and allowing businesses to operate without additional lockdowns.
The objective would be to channel this SPT to a specific medical fund that would allow hospitals to immediately (within the short term) enhance their medical resources and capacity so that more ICU beds/units can be set up and more medical equipment can be acquired to manage the huge number of cases being reported.
What is absolutely crucial is that the government needs to state the commencement date, the objective, and the end date clearly in its communication narrative. Failure to consistently do so will lead to presumptions of a permanent corporate tax rate increase, and that will have an effect on foreign investors who may become concerned about further changes being made to the general corporate tax regime.
5. A counter-cyclical progressive capital gain tax
CME considers the proposal for a progressive capital gains tax (Hanusch-Wackermann tax) as part of the public sector role in supporting healthy growth of the economy, a role that should be guided by a two-sided countercyclical strategy.
On the one hand, it is to avoid trends of exaggerating or overheating in time and, on the other, it is to overcome a possible period of stagnation as quickly as possible.
A progressive capital gains tax (PCGT) would help the economic system in growing within the boundaries of a sustainable growth corridor.
The idea of such a corridor pre-supposes that the political sphere can take the appropriate measures that can effectively and opportunely tame and dominate those forces in a capitalistic system which continuously tries to go through the roof and risks exiting the corridor towards an excessive growth path.
At the same time, policymakers have to make sure that the economy will not fall out of the corridor, and that it will not have to cope with economic stagnation (like in the situation we are in now).
How can a PCGT help keep the system moving within the boundary of the corridor without limiting the positive effects produced by profit-seeking behaviours?
This tax could be an automatic stabiliser to investment behaviour. As it is easy to realise, the proposed scheme (progressive) will generate a situation where the lower the return the lower the tax rate.
It is well known that, in general, low return investments are the ones linked with low-risk and, therefore, such a tax would favour conservative behaviour. Overall, we would see a shift in the behaviour away from highly speculative investments promising a high rate of return, because some investors will lose interest because of the increased tax burden.
In a situation where the economy finds itself above the corridor (overheating), fewer people will join the bandwagon, and the dangerous bubble formation might evolve at a slower speed.
This would give the system the chance to slow down on its own or integrate the highly dynamic sectors in such a way as to widen bottlenecks before a looming breakdown.
In times when the economy is stagnating and below the neo-Schumpeterian corridor, the low tax rates incite investors to leave their money in the capital market and support a sustainable development.
Furthermore, the government would increase its tax receipts above average in boom times due to the rising tax rates and could, theoretically, use the money to support the economy in times when it nevertheless falls through the corridor.
With this scheme, innovative industries may still attract investors at the beginning of their expansion, when expected returns are low and financial resources are more needed. At the same time, the influx of second-comer speculators may be contained precisely because they tend to enter the game when returns are rising and therefore they could be discouraged, at least to a certain extent, by increasing taxation.
Thus, less money is invested when returns are on the rise and speculation-induced overheating could be prevented. The anti-cyclicality is then built into the scheme. - FMT
Carmelo Ferlito is CEO of the Center for Market Education.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.


Artikel ini hanyalah simpanan cache dari url asal penulis yang berkebarangkalian sudah terlalu lama atau sudah dibuang :

http://malaysiansmustknowthetruth.blogspot.com/2021/09/the-pillars-for-balanced-tax-reform.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MalaysiansMustKnowTheTruth+%28Malaysians+Must

Kempen Promosi dan Iklan
Kami memerlukan jasa baik anda untuk menyokong kempen pengiklanan dalam website kami. Serba sedikit anda telah membantu kami untuk mengekalkan servis percuma aggregating ini kepada semua.

Anda juga boleh memberikan sumbangan anda kepada kami dengan menghubungi kami di sini
Some 30k Civil Servants Yet To Register For Covid 19 Vaccination Cuepacs

Some 30k Civil Servants Yet To Register For Covid 19 Vaccination Cuepacs

papar berkaitan - pada 17/9/2021 - jumlah : 842 hits
Some 30 000 civil servants have yet to register for Covid 19 vaccination and the Congress of Unions of Employees in the Public and Civil Services has urged them to sign up soon to help the government achieve herd immunity before next year I...
Announcing The Tab S7 Fe In Malaysia A Fan Favourite For You To Do More Of What You Love

Announcing The Tab S7 Fe In Malaysia A Fan Favourite For You To Do More Of What You Love

papar berkaitan - pada 21/9/2021 - jumlah : 377 hits
Samsung Malaysia Electronics recently announced the Galaxy Tab S7 FE bringing together fan favorite features including a large display for entertainment creative work and multi tasking while at an affordable price Tablets have become a hous...
Send In The Troops For Flood Clean Up Says Warisan

Send In The Troops For Flood Clean Up Says Warisan

papar berkaitan - pada 21/9/2021 - jumlah : 301 hits
Most of the work to help flood victims was being done by volunteers and residents Darell Leiking said KOTA KINABALU Warisan deputy president Darell Leiking has called for the security forces to be mobilised for flood relief work in Sabah an...
Pick Smkgp The Preparation For The Big Day

Pick Smkgp The Preparation For The Big Day

papar berkaitan - pada 1/10/2021 - jumlah : 293 hits
PICK SMKGP The preparation for the big day Sepagian juga kami di sini Bincang Susun Bincang Readjustment Yang penting program ni dapat berjalan dengan baik selesa dan kondusif pada semua murid kami nanti Penat juga tapi seronok terbaeekkk k...
Zahid Don T Blame Bn For The Downfall Of Pakatan Perikatan Administrations

Zahid Don T Blame Bn For The Downfall Of Pakatan Perikatan Administrations

papar berkaitan - pada 20/9/2021 - jumlah : 354 hits
Datuk Seri Ahmad Zahid Hamidi said the dissatisfaction of the people towards the two previous governments stemmed from their failures in fulfilling their promises to Malaysians Picture by Ahmad ZamzahuriKUALA LUMPUR Sept 19 Both the Pakatan...
New Half Doors Now Available For The 2021 Jeep Gladiator

New Half Doors Now Available For The 2021 Jeep Gladiator

papar berkaitan - pada 16/9/2021 - jumlah : 328 hits
Jeep Performance Parts and Mopar are making available new half doors for the 2021 Jeep Gladiator The half doors and a choice of upper window assemblies are part of the Dual Door Group factory option for the Gladiator According to Jeep the n...
Dymm Sultan Of Johor Speaks Up For The People Again

Dymm Sultan Of Johor Speaks Up For The People Again

papar berkaitan - pada 19/9/2021 - jumlah : 269 hits
My view is the DYMM Sultan of Johor could run for Prime Minister and win For one reason only The Sultan always speaks about the people In Malaysia this is a rarity The politicians speak about themselves about their government they defend th...
Xtreme Recon Package Now Available For The 2022 Jeep Wrangler Willys

Xtreme Recon Package Now Available For The 2022 Jeep Wrangler Willys

papar berkaitan - pada 25/9/2021 - jumlah : 236 hits
Meet the 2022 Jeep Wrangler Willys with the Xtreme Recon package The new package will be available for both the and Let s take a look at what you get if you spring for the Xtreme Recon package Xtreme Recon Package EquipmentThe package inclu...
Tested American Metal S The Disciple Sonic Infused Whiskey

The Disciple A Mixed Metal Harley Bobber With El Knucklehead Power

The Incredible Tale Of The Talking Tortoise A Fifth Century Ethiopian Exploration Of Wisdom And Humility

Aquarius Career Horoscope December 2021

Xhensa And The Whispering Stones A Tale Of Courage Curiosity And Talking Rocks

Leo Promise Report 2021

Mighty White Blackpepper Chicken Bun

10 Health Benefits Of Cashew Nuts


echo '';
Biodata Terkini Penyanyi Liza Aziz Peserta Gegar Vaganza 2024 Musim 11 GV11 Adik Beradik Kepada Azlina Aziz

Senarai Peserta Gegar Vaganza 2024 Musim 11 GV11 Tonton Konsert Minggu 1 Pada 24 November Live Di Astro Ria Sooka Online

Resepi Sos Hijau Vietnam Roll Paling Lemak dan Berkrim

Biodata Terkini Sheila Abdull Peserta Gegar Vaganza 2024 Musim 11 GV11 Penyanyi Lagu Mungkinkah

Biodata Terkini Illa Sabry Peserta Gegar Vaganza 2024 Musim 11 GV11 Penyanyi Lagu Keranamu Kekasih


Mengenal Pesona Kerajinan Tangan Bali Keunikan Dan Daya Tarik Wisata Yang Memikat

Fakultas Matematika Dan Ilmu Pengetahuan Alam Jantung Ilmu Pengetahuan Dan Teknologi

Barakallah Fii Umrik Along

Surrender Polisi Medical Card Aia Yang Semakin Mahal

Abbott Melancarkan Kempen Glucerna Startswithyou Dan Program Perubahan Gaya Hidup Glucerna

Cucur Ikan Bilis Rangup Di Luar