BE wary about imposing a new form of tax on the private sector as the latter is struggling to stay afloat due to the COVID-19 pandemic.
Speaking to FocusM, former International Trade and Industries Minister Datuk Darell Leiking said it was important for the Government to consult stakeholders before mooting a new tax regime.
“We must discuss with the private sector first and I’m sure the Government would have done that. Our priority now should be reviving the economy while keeping COVID-19 at bay,” he said.
Yesterday, Maybank Kim Eng speculated the Government may introduce a windfall tax on economic sectors which reaped huge profits during the pandemic, under Budget 2021.
It added that a windfall tax was not unusual as there was a precedent during the Asian Financial Crisis in 1998.
“Budget 2021’s wildcard is a windfall tax on glove manufacturers. The Government imposed the Windfall Levy Act 1998 during the recession on the plantation sector.
“It was also applied on the energy sector in 2008, particularly the independent power producers,” the research house was reported as saying.
However, Leiking poured cold water on Maybank Kim Eng’s suggestion, saying the latter cannot compare the current predicament with past economic recession.
“Unlike in 1998 and 2008, the situation now is different. COVID-19 has created a new psychological problem where people are afraid to go out due to the virus.
“A lot of people are staying home for safety. A lot of schools have closed. What will happen to the students and what will happen to those leaving universities next year? Will they get jobs?” he asked.
The Penampang member of Parliament concurred that some sector may have reaped huge profits during the pandemic but said the companies are also struggling to maintain jobs for its staff.
“We must understand that businesses of all strata are affected by COVID-19. Some may have had bumper profits, but expenditure have also soared.”
“What will happen if they cut jobs? It will affect our workforce. Just look at those who are involved in the gig economy. They are struggling. The cycle of wealth generation has been halted and people are getting lesser,” remarked Leiking.
To generate more revenue, he noted the Government should look into plugging leakages first before imposing a new tax regime.
“The Customs Department should throw the book on those smuggling contraband products as this is causing heavy losses to the Government,” he added.
On Budget 2021, he urged the Government to inject empathy and ingenuity in its approach to “contain and maintain” the situation.
For example, Leiking suggested the Government to help out restaurant owners, affected by the conditional movement control order (CMCO), by giving them business opportunities.
“What the Government can do is to engage these restaurants to cater food for our frontliners such as the doctors, nurses, police and also patients. With that, the restaurants will have means to survive.
“This is nothing new. In some countries, they have converted the big screen at cinemas to be used for online gaming activity to generate business for its operators. We need to be innovative,” he stated.
Leiking said in many nations, including Malaysia, the constraints caused by the pandemic has forced people to become creative.
“And the Government and industries should tap into this ingenuity,” he concluded.
Finance Minister Datuk Seri Tengku Zafrul Aziz is scheduled to table Budget 2021 on Friday (Nov 6).
Experts have said the budget will include measures to revive the economy that has been ravaged by COVID-19.
To date, the Government had announced six stimulus packages amounting to over RM300 bil to keep the nation going while doing its best to keep the pandemic in check. – Nov 3, 2020
