Injecting equity into our tax system
Posted on 25 August 2011 - 03:18am
Natalie Shobana Ambrose
"STOP coddling the super rich", billionaire Warren E. Buffett's Op-ed piece last week hit a few raw nerves especially its timing after a tug-of-war for an increased US debt approval that has made many nervous.
Buffett who is estimated to be worth US$47 billion is of the opinion that he and his super rich friends should pay more taxes as their taxable income is half of what the average middle-class wage earner pays. That is because most of Buffett's taxable income goes through the capital gains tax sieve which is at a much lower rate than what typical wage earners are taxed.
If Buffett was Malaysian he'd have paid next to nothing as our capital gains tax is 0% for equities and 5% for real property gains. What does all this mean to the layperson? Clearly, those with a disposable income surplus have the luxury of dabbling in capital gains activities and even when they do make a profit no matter how big or small, no Malaysian is taxed.
Now to naively put it, the more loose change you have, the more you've got to play with, and so potentially, the more you're going to make (or lose).
Come April when tax forms are due, you'd have made more money in a year than the wage earner who is dependent on a salary, yet you will not be taxed for any of the money you made at the stock market even if you made a million bucks.
Now we take that un-taxable profit and invest part of it in a few condos, and a few friends do the same which then causes the prices of property to sky rocket like it has. Some already own houses and investments and yet get a discount on all the newly-acquired property including luxury homes.
It doesn't matter that this discount was put in place to balance out socio-economic disparity many years ago, but has now translated into assisting lavish lifestyles inevitably raising the cost of living for those paying more taxes and living from hand to mouth.
If you were to sell any one of these newly acquired property within five years of purchase, you pay a 5% real property gains tax on what you made and still get a RM10,000 discount.
However if you decide to hold on to the property (noting that prices generally appreciate) and sell it after five years, you make a clean profit – that's right, not taxable.
Now compare that to what your friends made – some still made more thanks to the 5%-7% discount. What if the profit was RM100,000 or RM1 million?
We may not have Buffet magnitude billionaires just yet but according to the Malaysian Business we have companies paying RM455.6 million in a board payout with one director being paid RM106 million making all the other high earners look like paupers with RM12 million payouts. Imagine if they invested their bonus in equities without having to pay tax or bought multiple property at a discount.
Our tax systems need to focus on narrowing budget deficits and looking out for the wellbeing of every Malaysian citizen not just a select few.
Our country's affirmative action needs to evolve. Instead of a quota system based on race, it needs to be based on alleviating poverty and income levels. This does not mean wealth is being taken away – it means that wealth can now be distributed equally.
In the long run, looking after the wellbeing of those that need help will benefit everyone. Having a layer of super rich, does not translate into a community of high earners. It just means a select few are growing their wealth faster by taking advantage of a lopsided tax system and other biased mechanisms.
In order to have a united Malaysia, we need reforms that view citizens as Malaysians first, promoting equality across the board. We can start with revamping our tax system and include good governance in that equation. Maybe then we can truly say we are headed towards a 1Malaysia.
PENDAPAT PERIBADI :
Itulah yang manusia sering lupa. Sesungguhnya Islam adalah indah. Islam telah mewajibkan zakat keatas umatnya. Islam tidak menindas manusia. Untuk kes diatas, orang yang kaya makin kaya. Tu salah satu tanda akhir zaman la tu. Harta berlegar dikalangan orang tertentu je. Dah la kaya, tak perlu keluar cukai. Sistem tu, kafir yang buat terutama orang yang ada kuasa untuk menentukan polisi. Biasanya pemerintah la. Mereka buat polisi tu kelihatan macam best je tapi hakikatnya siapa yang mampu nak invest dalam property ni? tentu la orang yang kaya. Jadi kembalilah kepada QURAN & HADIS. Kesimpulannya, Islam adalah jalan penyelesaiannya..
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