KUALA LUMPUR, July 14 — The government should introduce a windfall tax on businesses facing extraordinary profits now to ensure it has enough resources to mitigate the economic impacts of Covid-19, said former prime minister Tun Dr Mahathir Mohamad.
Dr Mahathir said this is necessary as the additional funds collected by the government could be appropriately channelled to vulnerable groups in need of government aid and spending towards directly combating the pandemic.
“This could help the government especially during Covid as they need to spend a lot to help the poor by giving them financial aid, providing food to those who need it and all of this is necessary and requires a lot of funds.
“But if [the government] follows through the normal tax collection methods during a struggling economy, then they would get less tax,’’ said Dr Mahathir.
Dr Mahathir was speaking at a forum today organised by a group calling itself Reset Malaysia, discussing whether the Malaysian economy can be saved.
Besides Dr Mahathir, the panellist includes think tank Khazanah Research Institute senior adviser Prof Jomo Kwame Sundaram, economist Nungsari Ahmad Radhi, and another think tank Institut Masa Depan Malaysia chief executive officer Mohd Nizam Mahshar.
Dr Mahathir further explained that during the pandemic, there are private firms and even banks that have garnered billions of ringgit in profit during their first financial quarter while so many others face financial uncertainties.
“So, we need to think of ways to balance this effect so that those who experience huge profits can help [the government[ in its affairs to help the needy,’’ he said.
Dr Mahathir also suggested that the government cut unnecessary spending on non-essential sectors or services and instead allocate all resources towards directly combating the pandemic.
When asked whether the government could reintroduce the Goods and Services Tax (GST) to gain more revenue, Dr Mahathir however disagreed.
“Whatever funds we need to raise through taxes, is a burden to businesses, excepting of course for the excess profit tax,” he said, referring to windfall tax.
“There are also now people who are being paid [full] salary, we don’t need to support them, they need to support themselves.
“But people who have lost their income, they need to be helped, so it is the relocation of funds that is important, not the raising of funds from an economy that is not doing well except for the windfall tax that everybody seems to agree about,’’ he said.