KUALA LUMPUR: The government has no plans for now to impose a windfall tax on rubber glove sector or other businesses which generate large profits during the global health crisis, according to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Economists, however, believe that such tax should be imposed on rubber gloves companies that are enjoying extraordinary profits from the Covid-19 pandemic to assist in the country's economic recovery.
In a written Parliamentary response to a question from Muar Member of Parliament Syed Saddiq Syed Abdul Rahman on Thursday, Tengku Zafrul said the windfall profit levy or levy on extraordinary profit was being charged only on palm oil sector.
This was based on the threshold value of the market price of crude palm oil issued by the Malaysian Palm Oil Board on a monthly basis, he added.
Glove manufacturers such as Top Glove Corp Bhd, Hartalega Holdings Bhd and Supermax Corp Holdings Bhd have enjoyed exceptional gains following the surge in demand for rubber gloves worldwide in the wake of Covid-19.
Academy of Professors Malaysia agriculture and food security cluster head Profesor Datin Paduka Fatimah Mohamed Arshad said the government should impose such windfall tax to ease its debt burden.
"The country's debt to GDP (gross domestic product) ratio is being increased from 60 to 65 per cent," Fatimah told the New Straits Times.
Fatimah said it was socially unjust for rubber gloves companies to make huge profits while the rest of the society was suffering financially during the pandemic.
"Their profits can be considered excessive or abnormal compared to other companies or other businesses who are striving hard under a pandemic. It's only fair that they pay taxes to repay the society (especially the Covid-19 victims) that indirectly gives them the windfall profit with an enormous amount in billions," she said.
"With the economy improving, demand for gloves will be sustained beyond the health sector. In short, the windfall tax will also benefit the gloves companies in return. It is not linear but it works in a feedback manner or loop. The United States has imposed a windfall tax, why can't we?" she asked.
Putra Business School business development manager Associate Professor Dr Ahmed Razman Abdul Latiff echoes the view.
Ahmed Razman said the government might have lost the opportunity to generate additional revenue during the pandemic due to the decision not to impose windfall tax.
"Even though this windfall tax is seasonal in nature, it is especially helpful for the government to benefit from sudden increase of demand for a particular product or services and this additional revenue can be used to help cover the annual expenditures.
"Even though the government does not have plans to impose it now, they should consider imposing it in the near future. We have seen how the palm oil industry contributed hundreds of million ringgit in additional revenue to the government during the first two quarters of the year when the price of palm oil soared and it didn't curtail or hinder the industry itself," he added.