One of the factors contributing to the persistent fiscal deficit in Malaysia has been the deliberate and gradual reduction of income tax rates over the years.
From a fairly progressive tax system, Malaysia has moved towards a regressive tax system. The government has trimmed the tax rates for the rich and super-rich over the years.
Singapore is now bucking the trend by raising income tax rates for high-earners by 2 per cent.
2% increase in income tax rates for higher income earners from YA2017. Top 5% earners affected #SGBudget2015 pic.twitter.com/jcxmDuPvhb
— MOFsg (@MOFsg) February 23, 2015
This simple increase to raise the upper band of the income tax rate will net the Singapore government an extra S$400m per year.
In contrast, look at what the Malaysian government has done. It has actually reduced the income tax rates for the upper bands:
No wonder the government now have to make up part of that shortfall in its budget by imposing hefty GST, which will hit the low-income group (who can’t afford RM1200 hair-dos, much less jetset around the world on shopping sprees) the hardest.
And don’t get me started on corporation tax, which was once again reduced by one percentage point from 25 per cent to 24 per cent. Such repeated reductions, along with clever tax avoidance schemes including transfer pricing and sundry corporate tax ‘incentives’ and ‘allowances’ have put a damper on government tax revenue collections. This, at a time when the ordinary rakyat will have to cough up 6 per cent in GST on much of their consumption expenditure.
No wonder we are not making much headway in tackling the wide income inequality in the country.
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Singapore could be holding its GE this year and taxing the rich could be a way to appease the majority heartlanders?
The rich would not mind higher tax in return for the stability provided by PAP for them to make more money.
The Star paper on Tuesday wrote about the rise of Sugar Daddies in Malaysia potentially a societal risk.
with less money in pocket to cover daily expenses like education and housing cost, many young ladies trade virtues for fast cash. If you have young daughters, now it’s time to have open and Frank talk on morality over material indulgence.
I am sure Sugar Daddies can be a hot topic in aniletto.com very soon.
Haha sugar daddies will go broke when property bubble bursts. Then we can counsel them.
Mujica for PM of Malaysia !
http://www.bbc.com/news/world-latin-america-31679475
Singapore started GST with just 3%, but BN regime shocked and awed us with 6%!!!!
Irien ; Singapore started GST at 3% in 1994 moving to 5% 2007. For 20 years we have `0` GST. Current Singapore GST is 7%. Now we start up with only 6%.
Next time be more specific and give the full details. Don`t hide one bit here and there to create an atmosphere of deception just like Pakatan DAP & PKR
Yang ; What deception you are talking about? Irien merely said Singapore started (begin, initiate) GST with 3%, a small percentage compared with Malaysia’s 6%. It make more sense to start with lower percentage but obviously your NST thinking is otherwiae.
gk ong ; Think first before rebutting. Singapore start with 3% in 1994 moving to 5% and now 7%. We have had “ZERO“ GST for 20 years. Now our starting GST at 6% is even less than Singapore 7%.
Is this not a web of deception comparing 20 years ago to todays` situation not mentioning that we have had 20 years “`ZERO“` GST.
You are like asking the new hawkers to make sense and start selling their Char Koay Teow for RM2.20 per plate like 20 years ago instead of current situation of RM4.50.
If Malaysia’s starting of GST 20 years later than Singapore is better, then wouldn’t it be even better not start it at all?
Ed G, It would have been better if Malaysia had started GST 20 years ago. The fact that it did not start that earlier is because the govt care for the people. But then the people take for granted everything that the govt is doing good for them. It result in many not wanting to pay their taxes. GST is to check mate all these tax evaders. Previously the govt is very lenient in those taking PPTTN loan which result in the non malay saying that it favour them by not being strict to them. Now that the govt is… Read more »
The Sun frontpage headline today: “GST Shocker’ – patients in private hospitals not exempted from 6% tax for drugs and consultation.
Less than a month before implementation, looks like more shocker to come?
Readiness for GST is suspected?
2 sundry shops in my neighbourhood has closed the business for good as they could not deal with the complications of GST.
Yang, if the government were to be truly caring for the people, why did they punish everyone with the GST instead of just taking the bull by its horns by going after the tax evader? Why make the poor suffer due to the misdeeds of others (the tax evaders}? And talking about procrastination, I am sure most of us are aware of the financial and spending discrepancies being highlighted in the Auditor General’s report without fail every year. In fact, this phenomenon has been prevailing since the 1970s. Not surprising that our currency has also been sliding against the Singapore… Read more »
Spot on Ed G! Truly tickling the G Spot of Yang?
Yang is now searching the archive of NST to find answer?
The BN regime has no choice but to increase the tax burden and collect more revenue because it needs to bring down the massive budget deficit which has stretched back for 14 years. In simple language, it has spent more than it has collected in terms of revenue for more than a decade. Now Malaysians have to pay the painful price for the irresponsible and spendthrift policies of our leaders. Those who thought that we had a bottomless well of financial reserves to draw upon are now hiding their heads. The colossal amounts spent on Proton, Malaysian Airlines, Bank Bumiputra… Read more »
There is a big difference between Singapore and Malaysia, Singapore foreign investments continue to grow, its holdings of foreign assets has sky-rocketed, meaning Singapore has been successful creating opportunities for the rich and hence taxing the rich will not drive them away. For Malaysia, already a large part of the economy where it takes from one pocket and put it into another, there fore, raising taxes of the rich, taking from one pocket and giving it to the poor or another pocket, will drive away the most productive rich only and likely never punish those who should not have been… Read more »
Average starting salary of Singapore graduate is S$3200. Malaysia only RM2200.
Most Singapore graduates get employment within 6 months upon graduation. Most Malaysian graduates are still unemployed.
So less tax revenue for Malaysia from this point of view?
Taxing the rich has its pro & con. It is a 2 way sword. The govt is trying to streamline the tax system to ensure that those taxable are taxed. If you tax the rich too high, they may take their money else where for investment. In the long run there will be less job, businesses and finally affect the country`s economy. Look at the UK in the sixties where they taxed the rich so high for their welfare programme. Investors start running and the economy nearly came to a collapse until its currency has to be devalued.
The UK started implementing Thatcherite neoliberal policies which has widened income inequality.
Now, something in 1MDB is more interesting and doomsday is around the corner ?
gk ong ; The opposition have been clamouring for a float system for petrol. So if any increase blame the opposition not the govt. Oil price may go up to US65 per barrel. With that petrol price will be increased further. If we have opt for a fixed rate of about 2.20, whether oil price go up or down at least we can be certained that this price will be there for a very long time unlike the float system. In the fixed system, the govt may make some and lose some depending on the price of oil. So blame… Read more »
Najib said Malaysia government only invested RM 10 million in 1MDB. But why BN is seeking cabinet approval for RM3 billion bailout recently and the debt is more than RM 40 billion?
Najib also said his wealth is not from inheritance, could it then be from business dealings with Jho Low ie. Hollywood fipm investment?
BN is true to its Barang Naik brand name as it kicks start its kempen turun harga with 25 sen fuel hike!
Singapore motorists are grateful to BN for cheap petrol across the causeway.
Change the government.
Lee Kuan Yew 1 , Mahathir 0
(Even if Singapore is “Disneyland with capital punishment”)
Phua ; You gave LKY 1 even if it is Disneyland with capital punishment. Would you still give 1 when it still has ISA and the Sedition Act. If you do, could you please elaborate on why ?
BN Regime is subjecting rakyat rich or poor with all kinds of payment when the nation is highly in debt, Ringgit is falling, oil profit is diminishing (cash cow Petronas lost RM2 billion last quarter), credit rating is dropping, tourism revenue decreasing…etc.
BN will never follow the practices of the Red Dot to show its ketuanan status 50 years after the separation.
One month before GST we can see lots of wayang campaigns to get retailers to cut price. Better buy your new PC/tablet or mobile phone before April Fools Day.
Tax the rich ones more to reduce the genie-coefficient index.
Before GST kicks in, plan to upgrade my pc to tablet as I can save 6% tax.
The UMNO Baru-BN Regime knows the GST is politically unpopular and will dampen the economy (maybe even push it into recession?).
But they are running out of money and therefore will implement it ….
(There are many pros for a GST. But do you trust this regime to handle the extra money collected from the GST in a fiscally responsible manner?)
Watch this BBC documentary series:
The Super-Rich and Us
https://www.youtube.com/watch?v=t2BiuW93bos