Use RM3b from windfall tax to stabilise goods’ prices instead of blaming traders, ex-minister tells Putrajaya

Lim described Malaysia as facing a 'national crisis' of inflation at unprecedented levels due to soaring food prices, prices of basic necessities and construction cost. — Picture by Shafwan Zaidon
Lim described Malaysia as facing a 'national crisis' of inflation at unprecedented levels due to soaring food prices, prices of basic necessities and construction cost. — Picture by Shafwan Zaidon

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KUALA LUMPUR, Dec 1 — The federal government should stabilise the prices of essential goods that have reportedly been soaring in Malaysia, by using the RM3 billion that would be collected through a one-off windfall tax known as Cukai Makmur or Prosperity Tax, Lim Guan Eng said today.

Lim, who is a former finance minister and the DAP secretary-general, said the government should do this instead of blaming traders for the rising inflation as the latter group was also facing rising costs.

“DAP proposes as a first step, an injection of RM3 billion injection from proceeds collected from the Prosperity or windfall tax into a National Price Stabilisation Fund that provide incentives to increase production and supply as well as partly subsidise cost to slow down the increase in prices.

“Such a National Price Stabilisation Fund will also help to temper extreme volatility in prices by sourcing directly from producers or reduce logistic costs,” the Bagan MP said in a statement.

Lim was referring to the government’s announcement on October 29 that it would impose a one-off special windfall tax known as Cukai Makmur for high-income companies, with a 24 per cent income tax rate on the first RM100 million of companies’ chargeable income, and with the remaining chargeable income to be taxed at 33 per cent for the assessment year 2022.

Lim said the federal government’s proposed allocations in Budget 2022 to help reduce and maintain goods’ prices were “too small”, citing as example a RM200 million sum to help reduce essential goods’ prices for rural and island residents, a RM400 million scheme to stabilise cooking oil prices, and a RM40 million subsidy for general use flour.

“The time has come for the minister and the federal government to take responsibility and not cowardly run away by blaming traders or even the heavy rainfall for the soaring prices,” he said, referring to the Domestic Trade and Consumer Affairs Minister Datuk Seri Alexander Nanta Linggi.

Earlier in his statement, Lim described Malaysia as facing a “national crisis” of inflation at unprecedented levels due to soaring food prices, prices of basic necessities and construction cost, before claiming that the federal government appears incapable of handling this crisis.

Lim noted that the public’s purchasing power has been reduced as daily necessities are sold at “luxury prices”, suggesting that any financial aid from the government to the public has been totally cancelled out by the rising prices and as salary levels remain stagnant.

“The government should stop pinning the blame solely on traders, farmers or businesses when they are also victims of high prices imposed upon them by the forces of supply and demand, rising logistics and transportation costs.

“Action taken to punish all traders is merely to cover up the failure of an ineffective minister but does not solve the problem of soaring prices but may make the problem worse with supply shortages,” he said.

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