Toll takeover plan futile, tax system needs a revamp, says PM economic advisor

The emphasis on the poor will not only be good for social mobility but also for economic growth


THE GOVERNMENT’S plan to take over several major highways to abolish tolls will not have major benefits on those in the bottom 40% (B40) income group.

The prime minister’s (PM) economic advisor Dr Muhammed Abdul Khalid (picture) said a third of people in the B40 quadrant were not vehicle owners and will not benefit from federal policies to eliminate tolls or subsidise fuel.

“Now we are discussing, which I disagree, on buying tolls in urban areas. It still will not benefit onethird of the B40 that do not have cars or motorcycles. If I have RM6 billion, do I use it to buy tolls in urban areas? We should use this (instead) on public transport.

“And if it is used for public transport, it should be used not for urban areas but in rural areas. If I buy a toll in Kuala Lumpur, it will not benefit people in say Gua Musang or Sabah or Sarawak,” Muhammed said at the Malaysia Sustainable Development Goals Summit 2019 in Kuala Lumpur yesterday.

“It is not about not having enough money but how do you spend better. This is an area that I’m hoping the government would address,” he added.

Muhammed also said the country’s tax system ought to be revamped to help the poor and curb errant taxpayers.

Citing the Inland Revenue Board’s special programme for voluntary disclosure last year, Muhammed said some 480,000 cases were reported involving 200,000 individuals.

While the government’s recent announcement in the federal budget to raise the income tax for the rich was commendable, Muhammed said more needs to be done.

“It is not about punishing the rich but it is for fair taxation. A lot of people do not pay tax,” he said.

“If you look at the indicator of inequality, the level of inequality at the market based on wages or income, the US is higher than Malaysia. But after transfer and tax, the US is lower than Malaysia.

How is it possible? The US is the ‘godfather’ of capitalism but in addressing inequality, they are better than us because the taxation system (here) is not progressive enough to help the poor,” he said.

Muhammed said the emphasis on the poor will not only be good for social mobility but also for economic growth.

“When the poor have RM1 they will consume immediately. If the rich have an extra RM1 they will go to London and spend it. So, it makes economic sense to spend more on the poor,” he said.

Meanwhile, Muhammed said the government’s measurement of economic progress must be in line with standards observed by developed nations.

He applauded Putrajaya’s move to adopt the multidimensional poverty index but said the measure must be tweaked particularly on two items namely, education and health.

“Currently, the index defines you as poor if you have less than six years of formal education. We would suggest making it to nine to 11 years, up until secondary school.

We would also suggest that the health indicator includes malnutrition among kids.

“Our performance in terms of how we treat our children is embarrassing. It should already be a national crisis because the level of stunting among kids in Malaysia is one in five when globally that level has been declining.

Here, it is increasing. As it is more than 20%, it should be a national crisis,” he said.