P. Gunasegaram(firstname.lastname@example.org) wrote in todays’ s The Star on ways for the Government to increase its revenues, especially in this turbulent economic times, rather burdening the already burdened income taxpayers. He suggested these steps:
1) Hurry up and introduce the value added tax.
The idea to introduce value added tax has been floated a few times in the past but it never got past the tax policy makers desks. The broad based tax was seen as a better way of taxing the rakyat as it is based on consumption. As it is now, the percentage of people paying taxes is still low as compared to the general population. Worse still, those big consumers get to pay less than those average earners like us. On the other hand the distractors said that the introduction of such tax would increase prices and burden the rakyat even more. The Government stalled on its plan to introduce the tax in 2013. I believe, political consideration plays a big role in the decision. To avoid this, Gunasegaram suggested that essential items be exempted from this tax.
2. Introduce capital gains tax
Capital gains tax is tax imposed on income from gains from investments, property and asset sales, and stock markets. It is not quite popular of course among the investors but such taxes exist in many countries and it won’t affect the majority of the rakyat.
3. Be more aggressive in getting the wealthy to pay income tax.
Ever heard of a story of a millionaire who pays yearly income tax of only RM100?. The story might be much exaggerated but the fact that many eligible people escaped the dragnet of the LHDN. Judging by the number of people paying income tax, about two third of the people in this country are poor and do not have to pay income tax. It is still a mystery why is it so difficult for LHDN to track this people. If I am applying for a loan or a credit card, the finance company can get a status of my gross and net income in no time even without me disclosing the number of credit cards I have and the various loans that I took from other financial institutions. That means, the mechanism to ascertain how much money a person has in the financial institutions in this country is already in place. May be some sort of legislative directives need to be enacted to enable the LHDN to obtain the right to access such accounts in strict confidence. The LHDN keep on penalising salaried workers like me for not providing proper information or a tad late in filing our returns. For salaried people like us, there is no escape. Not that we are trying to evade paying our dues but please be fair to all and sundries. The road near my house were lined with stall jamming the road every now and then. One stall is selling grilled burger, there is a stall selling banana fritters, a stall for kuih-muih, etc. Lets do a bit of simple calculation. On the average, each burger costs RM5 and the owner can easily sells 100 pieces per night. That can be translated to RM500 per night. And he opens for business five days a week and that is RM2500 per week and RM10K a month. Annually his gross income would be a whopping RM120K , definitely falls well into the income tax paying bracket. And that is only one stall, there are about 20 stalls lining the short stretch near my place. And this situation is replicated in many housing areas in Kuala Lumpur.
4. Reduce tax incentives
Tax incentives to foreign firms operating in this country is necessary evil to attract investments. But, Guna said what is the point of giving them incentive if they are milking our labour and other low costs.
5. Auction land
Auction government land to the highest bidder to gain maximum income in development of Government’s land.
6. Auction licences
Licences for telephony and television rights must be auctioned to the highest bidder and renewable after a fixed period. As it is now, licences are given based on submissions and fees are fixed and in some cases there is no fees at all.
7. Sell concessions
We must a few countries in the world that give companies rights to operate highways for free.
8. Curb smuggling
The amount of money lost on smuggled items can easily run up to billions per year especially on cigarettes, beers, petrol and rice. I reckon corruption and lack of enforcement contributed to this. No doubt UPP has done agood job but a lot more can be done and that would cut down the losses to the Government.
9. Cut procurement costs
The Government beaurocratic tape in procurement is complex. As a government servant, I can understand the necessity to put in all these control mechanisms to avoid abuse. Maybe about time the Government make a proper comparative study on the costs of time taken to implement all the measure against the saving made if the procurement is made a lot faster by reducing or cutting certain less impacting procedures. In our recent meeting with the Secretary General of the Government, ironically, he was lamenting on why the Government contract has to be more than open market tender. It is normal for Government tender to cost about 10% more than market prices. In these days of electronic transactions, government can pay contractors within four days if everything is in order. The days of Government takes three months to pay contractors are long gone. So why should Government contract be more than market price?. In fact it should be cheaper, as Government gets a lot of concessions on many products and services. The recent MRT contracts were awarded within three to four months, despite the huge value of the contract and the complexity of the works. If the GLCs were allowed to short cut many procurement red tapes, why can’t the other Government agencies be allowed to do so? Many Government department want to speed things up, but the number of procedures, documentations, and agencies that they have to go through to award a contract is mind bending- even with electronic procurement processes in place. I can tell you how many of government servants were slapped with disciplinary actions for taking short cuts in order to speed things up. Audit is becoming a frightening word unfortunately.
10. Stop subsidising the big guns
Across the board Subsidies is actually helping the big guns more than the poor. Take the fuel subsidy. The guys with the three Brabus, Ferraris, Beemers use more petrol than the Mat Rempits in their kapcais or Pak Usin Botak in his C70 Honda Cub. The rich get more subsisidies and if they can afford those limousines definitely they can afford petrol at normal prices. The subsidies on LPG/LNG benefit the IPPs more than us consumers. I believe the Government have been trying hard to get a more equitable subsidy structure but so far with little success.