This would enable the govt to tackle the health crisis without inflicting additional burden on the public by introducing new tax such as GST
by ASILA JALIL / pic by HUSSEIN SHAHARUDDIN
THE government needs to impose a windfall tax on companies that are enjoying extraordinary profits from the pandemic to assist in economic recovery and help those who have lost their source of income.
Former Prime Minister (PM) Tun Dr Mahathir Mohamad (picture) said windfall tax is not a new measure and it would enable the government to tackle the health crisis without inflicting additional burden on the public.
“Windfall tax is not something out of the ordinary. It will help the government because in this current time it needs to spend more to help the poor and those who have lost their income,” he said during a virtual forum organised by Reset Malaysia yesterday.
He believes that there is no need for the implementation of other taxes on the public such as the Goods and Services Tax (GST) that has been abolished.
New taxes onto the public would not address the declining economy that the country is facing as it would only add more burden to individuals and businesses that have crumbled due to Covid-19, said the Langkawi MP.
Last year, rubber glove manufacturers raked in supernormal profits from the higher demand and selling price of rubber gloves worldwide due to the pandemic.
The government, however, did not impose a windfall profit levy as Deputy Finance Minister II Mohd Shahar Abdullah said it could give a negative perception to investors that the government is taking advantage of the profits generated by companies due to the global health crisis.
Economist Prof Dr Jomo Kwame Sundaram said the windfall tax is required to assist the country’s recovery process in the short term.
He noted several flaws in the current tax system which only focuses on indirect taxes instead of direct taxes.
“We need a progressive tax system in the long run. Meanwhile, in the short term, the government should impose windfall tax. There is no reason for its implementation to be further delayed.”
He said the government should not be afraid to spend more on efforts to stop the spread of the deadly virus in the country.
Developing nations, including Malaysia, are too fearful to make necessary spending to manage the virus and the Malaysian government is only giving its attention on implementing various levels of Movement Control Order to address the rising infections.
“We must spend money to fight Covid and it must be done in the right way.
“However, the public may not have confidence in the way the Malaysian government will spend, especially after they saw how the administration came into power,” Jomo said.
Economist Dr Nungsari Ahmad Radhi urged the government to utilise its available instruments such as the tax system to revive the economy and spur growth post-pandemic.
He said if the government does not tap on necessary measures such as imposing windfall tax on profit makers, the pandemic would put further strain on its coffers and restrict it from helping those who are vulnerable.
Besides imposing the tax, he said the government should not be afraid of the country’s rating by rating agencies if it develops a deficit because the money borrowed will be used for recovery purposes.
“It should not worry about the deficit it will have because the interest rate is currently low and the government needs to be prudent in its spending, so it can generate growth at a higher rate than the rate it made the loan.
“There is no need to be afraid of the rating agency if we explain why we need the deficit and how we spend it.”
He said if the government is prudent in its spending, it would also eliminate suspicions on corruption and mishandling of funds reserved for the recovery post-pandemic.