THE 2021 Budget proposals will be announced in Parliament on Friday. Most of the rakyat will be hoping that the proposals will contain some measures that can alleviate their financial burden especially during these challenging times with the Covid-19 pandemic.
So, the question is, what are the rakyat's wishes in these trying times from an individual taxpayer's perspective?
Reduction in personal income tax rates
If you were to ask any taxpayer for an opinion, the first thing that comes to his or her mind will definitely be "a lower tax rate!".
The current personal income tax rates in Malaysia are higher (i.e. the highest progressive tax rates of up to 30 per cent) compared with our neighbour Singapore, which has lower personal income tax rates of up to 22 per cent.
During this critical time, the rakyat have been severely impacted financially and non-financially. As such, a reduction in personal income tax rates would increase spending power and regulate their monthly cash flows.
With this initiative, the rakyat will have extra money to spend, which would lead to an increase in aggregate demand, create job opportunities and subsequently lead to higher productivity and boost the country's economy.
New tax rebate/relief for expenses spent on personal protective items
Personal protective items such as face masks, soaps and sanitisers have become a necessity for all of us in the "new normal".
This is an inevitable financial burden for everyone.
A tax rebate/relief should be introduced to reduce taxpayers' financial pain as many are spending a substantial proportion of their monthly disposable income in purchasing disinfectant products or other similar personal protective items that may help keep them safe as well as being compliant to the standard operating procedures mandated by the government.
New tax relief for expenses spent on covid-19 testing and supplements
In times like this, it is a top priority to maintain a healthy lifestyle. As such, it would be a good idea if Covid-19 testing and purchase of supplements are eligible for tax relief.
This could be an ideal precautionary step to prevent the spread of Covid-19 in the country.
Review on the tax relief for purchase of personal computers
The new normal in education has shifted the traditional ways of classroom learning to remote learning for both teachers and students.
However, remote learning has its challenges, especially for those with no easy access to digital devices such as laptops or tablets, headphones, recorders, printers and powerful router for faster and stronger Wi-Fi connections.
This has added more financial burden to the parents, especially those in lower income group, and more so if there is more than one child in the family.
At present, the expenditure for the purchase of a personal computer is claimable as part of lifestyle relief, but is restricted to RM2,500.
However, such a relief is not exclusive only for the purchase of personal computers but also reading materials, smartphones, tablets, sports equipment, payment of gym membership and monthly Internet subscription.
The special tax relief of up to RM2,500 on the purchase of mobile phone, notebook and tablet announced in the short-term Economic Recovery Plan is primarily to support employees under the work-from-home arrangement.
Therefore, the claimable tax relief should be reviewed or expanded in order to include other tools or gadgets required for remote learning.
Perhaps the level of extended relief provided can be made while taking into account the number of children still under the care of a taxpayer.
So, taxpayers out there, are these on top of your wish list as well? Last but not least, stay safe, stay healthy and stay well.
The writer is KPMG Tax Services Sdn Bhd head of global mobility services