Budget 2022: ‘One-off windfall tax timely, more must be done to ensure no group left behind’

The government’s plan to introduce a one-off corporate tax, dubbed ‘Prosperity Tax’ under Budget 2022 is timely, but more revenue could have been raised across the board through reforms to ensure those who needed assistance would not be left behind.

Former deputy secretary-general of the Treasury, Tan Sri Ramon Navaratnam, said while one-off taxation on companies that are making huge profits is welcomed, there should be continuity.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had announced that the government planned to introduce a special one-off corporate tax, dubbed ‘Prosperity Tax’. Under the system for 2022, a 33 per cent tax would be levied on income beyond RM100 million, while taxation for income below RM100 million, remained unchanged, at 24 per cent. The government said the move would ensure our healthcare system would be able to withstand future threats.

“Such a tax is consistent with the shared prosperity vision under the 12th Malaysia Plan, in the sense that wealth is being shared, but there must be continuity. Ad hoc measures only work for a little while. What happens the year after that, and beyond? How do we plan to sustain our healthcare system?” he asked.

Navaratnam, who is chairman of the Asian Strategy and Leadership Institute’s (Asli) Centre for Public Policy Studies, said it’s not just about taxing wealthy companies and individuals who can afford to pay, but also taxation from property gains, and debt duties.

“This way, you don’t just help those in the B40 group, but also those in the middle-income groups. If you cannot offer them aid, then why not offer more scholarships to their children,” he said.

“You can’t have better income distribution without introducing more tax. While we have before us a good, liberal, expansionary budget with a lot of concessions, they have not explained how they planned to find the finances, and with a large deficit, and debt.

He added Covid-19 had shown that more needed to be done for healthcare and housing, and changes ought to have been more drastic to ensure reforms in these areas.

“It makes us nervous to wonder how we are going to meet these additional costs. It is easy to spend, but difficult to implement effectively to ensure we get our bang for the buck,” said Navaratnam.

He added it was vital to set up a system to ensure concessions under Budget 2022 reached the target groups.

“In this Malaysian Family, there should not be a situation where there is a favourite child, or a step-child. There must be performance testing, and the monitoring outcome must be made public, so the government will become more accountable,” he said.

On the proposal for the Securities Commission to make it mandatory for all public-listed companies, beginning with large corporations, to appoint at least one female director, effective September next year, Navaratnam said it was “high time”.

“If any of these companies say they can’t fulfil this requirement, then they need to show cause as to why they can’t do so. Half our population are women, surely, there are many of them who are qualified.

“If they (employers) say women themselves do not want to be on top, then there must be some reason for this and we need to conduct proper studies to find out why they are not given a fair chance,” he added.

A total allocation of RM332.1 billion, the largest-ever for the country, was allocated under Budget 2022. The full budget speech can be viewed here.

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