Wealth tax on the cards? Finance minister says Putrajaya ‘constantly’ reviewing system to be fairer

Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz at Parliament Building, October 11, 2021. — Bernama
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz at Parliament Building, October 11, 2021. — Bernama

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KUALA LUMPUR, Oct 11 — Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz told Parliament today that Putrajaya is “constantly reviewing” the tax system “so it would be equitable and fairer” as concerns that Covid-19 would widen wealth disparity sparks a growing call to tax the uber rich.

“Constant initiatives are being undertaken to study our tax system holistically so that it is efficient, fair and equitable,” the minister replied to a query by Pasir Gudang MP, Hassan Abdul Karim.

“The government is also exploring any potential new revenue sources in order to finance the economic recovery by targeting those that need help the most and this involves engaging stakeholders so we could get feedback about the possible effects of these new taxes,” he added.

The Umno-led administration is facing mounting pressure to introduce new taxes that would tap into the wealth of elites and their businesses such as dividends from stocks or inherited wealth, which until today have remained non taxable, much to public chagrin.

Support for a capital gains tax, inheritance tax and a “windfall” tax have become more popular in the last two years as more economists warned about the pandemic’s worsening effect on wealth inequality.

Putrajaya is expected to raise the statutory debt ceiling today or tomorrow to raise an additional RM45 billion in pandemic spending. Tengku Zafrul, who tabled the amendment bill to grant the debt ceiling removal passage, was questioned if the government plans to introduce these taxes so it could raise the money.

All the RM45 billion in additional Covid-19 spending will be funded by borrowings, the finance minister told the Lower House.

Opposition lawmakers have demanded greater scrutiny on how Putrajaya intends to disburse up to RM45 billion in additional stimulus as the government moves to increase the country’s maximum statutory debt.

Tengku Zafrul tabled the Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020 for second reading this morning, amid accusations that members of the ruling coalition were allowed to exploit government aid to court support.

Opposition Leader Datuk Seri Anwar Ibrahim warned the finance minister that the pact to cease all political hostility signed by the Pakatan Harapan (PH) coalition and the government was contingent upon Putrajaya’s pledge for transparency in how the additional RM45 billion would be spent.

PH had been pivotal in getting the government to agree to raising the debt ceiling despite its initial hesitation.

Leaders from the coalition, riding on public pressure, said the RM90 billion in direct Covid-19 fiscal injection was inadequate to mitigate the fallout caused by the pandemic, and that additional spending was needed to put the economy back on track.

Both sides agreed that at least RM45 billion would be needed. If passed, Putrajaya will raise the ceiling to 65 per cent of gross domestic product from 60 previously.

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