KUALA LUMPUR, Oct 14 — Finance Minister Lim Guan Eng revealed today Putrajaya’s move to introduce a 30 per cent income tax rate on those making RM2 million and more annually came from a World Bank proposal.
Speaking at a dialogue session at the Budget 2020 Forum here, Lim said the World Bank noted that the highest tax bracket in Malaysia was still significantly below that of similar middle-income countries.
He also disclosed that the World Bank proposed a 35 per cent top tax tier but the government felt this would be seen as too harsh.
“Even with that proposal we are still too low compared to other countries.
“We feel that for the wealthy, a 30 per cent marginal tax rate is within their capability,” he replied to a question from the audience.
When tabling Budget 2020 last week, Lim said the proposed 30 per cent tax bracket for millionaires earning RM2 million onward per annum will only affect 2,000 wealthy households.
Lim said the government expected to raise some RM100 million from the new tax band.
However, Lim said the most important outcome from the move was economic growth, adding that it would in turn grow the income of the wealthy, and hence, cover the marginal rise in tax.
The tax rate for the top 5 per cent income earners is currently 28 per cent.
On another note, Lim also assured that the federal government did not plan to introduce a wealth and inheritance tax at the moment.
“A wealth tax is not on the table at the moment, of course unless there is drastic change.
“There is no intention to impose at the moment, at least not in the immediate foreseeable future,” he said.
A wealth tax is a tax based on the market value of assets that are owned, while an inheritance tax is paid by a person who inherits the money or property of a person who has died.