KUALA LUMPUR: The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is against the proposal by an economist for the government to impose inheritance tax and capital gains tax to widen its income stream.
Two weeks ago, Putra Business School senior lecturer Dr Ahmed Razman Abdul Latiff reportedly suggested the government to explore new avenues of income stream such as capital gains tax and inheritance tax, which focused on the society's upper class.
The lecturer was commenting on Finance Minister Lim Guan Eng’s announcement that the government had set up the Tax Reform Committee (TRC) to look into broadening and diversifying the government’s tax revenue and minimising tax leakages, without burdening the rakyat.
In a statement today, ACCCIM highlighted that imposing inheritance tax and capital gains tax had more drawbacks than benefits.
"These taxes would cause capital outflows while stifling the Malaysian entrepreneurs’ spirit of creating wealth and corporate elites’ desire to innovate and prosper," ACCCIM said.
"These taxes would dampen economic growth in many ways as it would stifle the growth expansion of small medium enterprises (SMEs) and family businesses.
"It would also discourage capital formation and savings corporates and investors would likely move their assets and investments abroad to avoid these proposed taxes," it added.
Overall, ACCCIM said these taxes would result in subdued market environment which was not conducive to attract local reinvestments and foreign direct investment that were needed to drive Malaysia’s economic growth and capital market development.
ACCCIM, in turn, suggested that the government, under 2019 Budget 2019, to gradually reduce corporate income tax to 18 per cent and lower the rate for SMEs to 15 per cent for the first RM2 million chargeable income.
It also urged the government to consider raising the personal tax relief for individuals to RM10,000 from the current RM9,000 and ease the burden of low and middle-income households via the lowering of personal income tax rate.
ACCCIM believes that enhancing corporates’ competitiveness and flourishing their business growth and profits, would lead to more revenue collected by the government.
"We view this as a long-term strategic policy to create a win-win situation for both the government and private sectors," said ACCCIM.