KUALA LUMPUR: The Centre for Market Education (CME) is not impressed with the retabled 2023 Budget, saying it lacks a comprehensive strategy for a holistic tax reform.
CME chief executive officer Dr Carmelo Ferlito said slogans like "tax the rich" or "tax luxury goods" were unlikely to produce any real benefit for the country.
"It does not introduce any attempt to rationalise government expenditures, while the burden of reducing debt is shifted on firms and individuals with new and questionable taxes.
"The same goes with the one-time RM500 injection into the Employees' Provident Fund account for a certain group of individuals.
"While being an overall cost for the government, it does not produce any real benefit for the people."
CME said the most significant points of the budget were the incentives for small- and medium-scale enterprises, plans to rebuild Malaysia's manufacturing base, the government's will to reconsider different investment schemes and reformation of government bodies and government-linked companies.
"These last three points, however, will need to be judged at the implementation moment, to see if the way in which they are developed will be consistent with the desired targets," said Ferlito.
CME said more had to be done in terms of fiscal reform and rationalising government expenditures.
It said the increase in taxation for incomes between RM100,000 and RM1,000,000 was unlikely to produce any real effect.
But it signalled that the government expected a certain group
of individuals to contribute to increase revenues.
On the proposal of a Capital Gains Tax, while agreeable in principle and eventually to be applied at the generality of firms, CME said it came at the wrong moment, when the country was about to face economic slowdown, while having to struggle to attract investments.
It added that the taxing of luxury goods was demagogic and violated the principle of horizontal equity, essential to a truly equitable tax system.
"No true effort is made to extend the tax base with better enforcement or effective measures, such as the Goods and Services Tax.
"Nothing is done on targeted subsidies. There has been a lot of talking on this point, but nothing is really tried.
"Rather, the amount of subsidies and handouts increases show that the government has no intention to move toward fiscal discipline and balanced budgets, shifting the burden of reducing debt to firms and individuals."
CME said taxation on vaping would incentivise the black market rather than help a rational harm reduction strategy, which required an adequate legislative framework, not just taxation.
"We wish to stress that, without government fiscal discipline, the country is unlikely to make a move in the direction of a sustainable growth path.
"Furthermore, new 'anti-rich' or 'anti-business' taxes will only undermine the local investment ecosystem," Ferlito said.