Our current system is incredibly one-sided in terms of taxation and legislation towards the rich class, foreign investors and multinational companies (MNCs). Most in this class only care about maximizing wealth for themselves and their shareholders, and are unconcerned about the socioeconomic quality and welfare of the common people.
They lack any sense of responsibility or altruism to contribute part of their wealth through proper taxation towards socioeconomic upliftment of average citizens. Instead, they’re determined to pay as little tax as possible to the government in order to achieve maximum profits. This is sadly the current state of our world.
As a result, many governments including our own compete with each other in imposing low taxes and lax legislation to attract foreign direct investments (FDIs). Indeed, this fierce competition is very much present between the ASEAN states. Aside from widespread corruption, this is one huge reason why these governments lack sufficient funds to allocate towards meaningfully aiding the common people. In turn, inequality between the wealthy class and the rest of society continues to worsen.
This form of taxation is unsustainable in the long-term because the greater the inequality, the angrier the masses will be at their strongly pro-wealthy, pro-corporate ruling class, thus leading to social unrest and even violence. For the sake of people's prosperity and long-term political stability, Malaysia’s taxation system needs to be reformed so that the average citizen’s socioeconomic quality is prioritized over the rampant greed of the corporate class. Make no mistake, this is the only way Malaysians’ lives improve.
The steps below need to be implemented together with other ASEAN countries collectively as well as gradually to avoid the flight of FDIs and the wealthy to other ASEAN countries as a way for them to avoid paying higher taxes and complying with stricter legislation.
1. Change the capital gains’ tax structure, both realized and unrealized, by charging notional equity interest on the assets of the richest people. Capital gains are taxes levied on profits earned on the sale of assets which have increased in value over the holding period.
By charging notional equity interests, the government gets a percentage share in those taxed assets. This eliminates the difficulty of valuating complex assets in order to tax them, as well as the incentive by the wealthiest to indefinitely delay selling (realizing) their assets in order to avoid paying capital gains on those assets.
2. Raise corporate taxes especially on companies recording high profits.
3. Raise income taxes on the T20 (top 20% in society). The criteria for being categorized in the T20 must be fair, and must apply to all forms of taxes levied on the T20.
4. Impose an inheritance tax on the T20, whereby when an individual from this group passes away and all his possessions (property, financial assets, bank accounts, tangible assets, etc) are transferred to another, the net value of all those transferred possessions is taxed and is to be paid by the inheritor.
5. Impose a property tax on the T20.
6. Create a public registry for the beneficial (true) owners of companies and trusts, thus boosting transparency and helping solve the issue of concealing asset ownership by the wealthiest through the use of companies and trusts based in tax havens.
7. Introduce legislation banning anonymous shell companies, thus helping to prevent the hiding of assets by the wealthy in these companies in order to avoid paying taxes on those undeclared assets.
8. Implement the Debt Monetization Strategy starting with a small amount of debt, in which Government Securities are sold to the country’s own central bank at a very low interest rate, say 0.1%. This provides necessary funds for the government without it having to undertake a huge debt servicing burden.
With the acquisition of greater funds from implementing these measures, the Malaysian government will be able to spend on programs that truly improve people’s socioeconomic quality, especially the B40 (bottom 40% in society).
This political culture of bending over backwards and catering to the interests of the wealthy and the corporations at the expense of the common people has to end. The only taxes are politicians talk about are regressive ones that hurt the average citizens, namely GST and SST. Enough of this! Let’s collectively pressure our Malaysian politicians to grow spines and work with the rest of ASEAN to impose stronger, fairer taxes towards the wealthy and FDIs.
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