Not the time to increase tax rates as economy still recovering but prosperity tax helps
The one-off collection of prosperity tax this year is expected to help lift the government’s financial burden as subsidies pile up, said finance minister Tengku Zafrul Aziz.
He said the government was still providing subsidies despite increase in costs and that the implementation of the prosperity tax would help boost government income.
Tengku Zafrul said one of the ways to increase government income was to increase tax rates but he felt this was inappropriate at a time when the economy was still recovering from the pandemic.
“Although the economy is expected to pick up this year compared to the last, I don’t think it’s the right time to introduce a new tax system yet,” he said.
“We need to wait for the economy to become more stable first,” he said at a media conference after the launch of the Employees Provident Fund’s i-Lindung platform.
Another way to increase government income was to reinforce better cost control and improve profits of agencies, he added.
“The prosperity tax helped a little. We will get the latest figures probably next month.
“Like I said in the Budget 2022, we did not factor in income from the prosperity tax in the government revenue. So that’s one of the improvements,” he said.
Low Current Debt Level
Previously, deputy finance minister Yamani Hafez Musa said the government estimated at least RM3 billion in income through the implementation of the prosperity tax, which was announced in Budget 2022.
Meanwhile, Tengku Zafrul said current debt levels remained below 65% of the gross domestic product (GDP) and that the government was not planning to increase the statutory debt limit.
Last month, the finance minister said government subsidies on consumer necessities were projected to hit an all-time high of RM77.3 billion this year.
Two-thirds of the amount, or RM51 billion, would go towards subsidising essential supplies, such as petrol, diesel, cooking oil, flour and electricity costs.
He stated that the projected amount was only if the market prices for fuel, coal and other commodities remained.
“When it’s added to other cash assistance like the Bantuan Kebajikan Masyarakat, including the Bantuan Keluarga Malaysia (at RM11.7 billion), and other subsidies (at RM14.6 billion), the total subsidies as of now is at RM77.3 billion for 2022,” he said. – FMT
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