Saturday, October 24, 2015

Taxing super-rich higher rates is just - finally BN getting it right?

Finally, Malaysia may be doing the right thing in increasing the taxes for the higher income earners in Malaysia. It is the just thing to do in a community, where the richer persons ought to contribute more for the general well-being of the community. There are poor and rich and every community, and the reality is not everyone has the capacity and opportunity to earn more than the rest - and it is not right to insist on every person to pay the same amount to the common fund for the good of the community.

It is sad that we are also valuing the work people do so differently - when obviously all work that is being done by people is just as important for the overall survival of the community.

Our Malaysia government has been for the past few years sadly, and I say wrongly, being reducing the tax payable by the rich and the very rich.

Last year the government reduced the tax rates for all of us who had a chargeable income of RM50,000 or less by ONE (1)% - whilst the rates of those who had a higher chargeable income was reduced by more than 1% - some even 3% --- Increase Individual Chargeable Income Tax Rates - 30 - 50%? Malaysia desperately needs money...

Now, remember we are really not looking at real income - but merely chargeable income after all the permitted deductions. Now, unlike the ordinary middle-income tax payer, the rich sometimes do employ 'experts' so that the can maximize tax deductions, and even develop means of avoiding payment of high taxes.

See also:-  Why cut tax rates of very rich - this really must be increased.

Finally in the 2016 Budget, the BN government is taking right steps

...taxable income band for the highest tax rate be increased from 25% to 26% for those with an income between RM600,000 and RM1 million...Meanwhile, for those with an income above RM1 million, the tax rate will be increased from 25% to 28%.-Najib's BUDGET 2016 SPEECH

But, it is still not good enough... when we compare some developed countries, take Australia for instance...

AUSTRALIA
Well those with chargeable income less that RM52,000 do not have to pay income tax
> RM52,000 but less than RM105,000 - you pay 19% to income tax
> RM105,000 but less than RM228,000 - 32.5%
> RM228,000 but less than RM514,000 -  37%
More than RM514,000 - 45%
And for Malaysia, really higher rates for those with taxable income of more than RM2 million ...and even higher for those earning billions..like someone that earned RM2.6 billion

SO FOR THE SUPER RICH IN MALAYSIA, there should be a staggered rate... 
With chargeable income more than RM50k - 20%
With chargeable income more than RM75k - 21%
With chargeable income more than RM100K - 30%
With chargeable income more than RM200k - 32%
With chargeable income more than RM300k - 35%
With chargeable income more than RM400k - 40%
With chargeable income more than RM500K - 45%
With chargeable income more than RM1 mil - 48%
With chargeable income more than RM2 mil - 50% 
Further, when it comes to income tax, it may be best to insist that all earning RM2,000 per month should fill in and submit income tax forms, and if they are not taxable - then they do not have to pay anything.  It is odd, that some people are not submitting Income Tax Forms. 

Najib taxes rich to help masses in Budget 2016



Putrajaya is counting on a 6% GST started in April to offset reduced revenues from oil. The government expects to collect RM27 billion from GST this year and RM39 billion in 2016. – The Malaysian Insider pic by Seth Akmal, October 23, 2015. 


Putrajaya is counting on a 6% GST started in April to offset reduced revenues from oil. The government expects to collect RM27 billion from GST this year and RM39 billion in 2016. – The Malaysian Insider pic 
 
by Seth Akmal, October 23, 2015. 

 


Prime Minister Datuk Seri Najib Razak is embracing a Robin Hood approach in his Budget 2016, increasing the tax on the country’s highest earners to fund measures to boost consumption and investment needed to shore up a cooling economy.

Those earning RM600,000 to RM1 million annually will be taxed at 26% from 25% now, while those making more than RM1 million a year will pay a rate of 28%, Najib said in his annual budget speech in Kuala Lumpur today.

He announced billions of ringgit in funding to build rural roads, boost Internet speeds, agriculture and tourism, and increase civil servant salaries.

The budget’s focus underscores the political and economic challenges Najib faces in keeping the nation on track to achieve high-income nation status by the end of the decade. The plunge in oil prices and a slowing global economy is hurting export earnings and government revenue, while the embattled leader faces calls to step down after a multi-million-dollar funding scandal contributed to a pullout by foreign investors from stocks and bonds and a weakening currency.

“Despite the constraints on financial resources, the government remains sensitive to the difficulties faced by Malaysians,” Najib said in Parliament.

Accelerate projects
 
Najib is counting on domestic demand to shore up a cooling economy as global growth falters, pledging to boost consumption, spur private investment and accelerate selected public infrastructure projects next year. And he plans to achieve this without deepening the budget deficit even as oil revenue shrinks.

The government predicts gross domestic product will expand 4% to 5% in 2016, from 4.5% to 5.5% this year, the Ministry of Finance said in its 2015/2016 economic report released today.

The fiscal shortfall is forecast to narrow to 3.1% of GDP in 2016, from a revised 3.2% this year.

“Taking into cognisance the weaker external environment, the government will implement policies that will further strengthen the resilience of the domestic economy,” the ministry said.

“Efforts will be taken to boost consumption by raising disposable income through creating more jobs and addressing the rising cost of living.”

Rural spending
 
Najib’s administration will intensify efforts to draw foreign direct investments, build a 1,796km highway spanning the eastern Sabah and Sarawak states, boost the social safety net and enhance utilities in rural areas, according to the report.

“The challenges confronting the economy in 2015 are expected to persist in 2016,” the Finance Ministry said, highlighting concerns, including heightened financial market volatility and a slowing Chinese economy.

Najib reiterated a commitment to balance the budget by 2020 amid increased challenges, according to the report. The federal government debt is estimated to be 54% of GDP as of end- June, from 52.7% in 2014, and will be within the 55% limit in 2016, the report said.

Delicate balance
 
“The government will continue to strike a delicate balance between supporting the growth momentum and ongoing reform initiatives while ensuring public finances remain sound,” Najib said in the report.

The ringgit strengthened 1.%6 to 4.2205 per dollar today, following a 3.9% loss in the last five trading days, according to prices from local banks compiled by Bloomberg. The currency is the worst performer in Asia this year and has depreciated about 17% against the dollar.

Najib is counting on a 6% goods and services tax started in April to offset reduced revenues from oil. The government expects to collect RM27 billion from GST this year, and RM39 billion in 2016, it said.

Consumer prices are forecast to rise 2% to 3% in 2016, compared with 2% to 2.5% this year, the ministry said.

Inflation averaged 1.9% in the first eight months this year. Despite a weak ringgit, inflation is expected to remain benign because of low oil prices and the waning impact of GST, it said. The central bank left interest rates unchanged for a seventh meeting last month. – Bloomberg, October 23, 2015. - Malaysian Insider, 23/10/2015
 

1 comment:

Thumb Logic said...

Hello please ine tune your reading. People who earn between RM500,000 and RM1,000,000 are not the super rich. Tey are just the upper middle class.