GEORGE TOWN: The Consumers' Association of Penang (CAP) has renewed calls for the government to reintroduce the inheritance tax to tackle the growing disparity between the "haves" and the "have-nots".
Its acting president Mohideen Abdul Kader said the consumer movement had continuously called for the reintroduction of the inheritance tax since 2001.
CAP, he said, was shocked with the preemptive announcement by Finance Minister Lim Guan Eng - even before the scheduled budget dialogue to be held on June 27 - that the long-awaited inheritance tax would not be implemented.
"CAP has consistently called for stringent measures to bridge this gap between the haves and the have-nots. The best way to tackle wealth inequality is through the use of taxation, especially that of inheritance tax.
"The growing disparity between the haves and the have-nots is unacceptable. People who work hard and toil over long hours pay taxes while those who gain fortunes by not doing work and instead merely inheriting them from someone else do not have to pay tax. This is in principle unfair and unjust," he said.
Mohideen said doing away with inheritance tax would only contribute to the worsening inequality between the two groups.
He said many governments are known to be addressing this problem and taken steps to impose inheritance tax to address it.
He cited a Financial Times report which said that United States billionaires, including George Soros and Facebook co-founder Chris Huges, had called for tax on the wealthiest with inequality topping the agenda for the US 2020 elections.
"We have been calling for the reintroduction of the inheritance tax since 2001. Implemented properly, the inheritance tax (as well as other relevant forms of taxation like wealth tax, capital gains tax and gift tax) provides important revenue for state coffers from the highly rich, and not from those in the lower income brackets.
"Inheritance tax (similar to estate duty or estate tax) is assessed on the net worth of an individual at death. Not all estates are subject to the tax. Only those estates above a certain value are included.
"Amid the current economic slowdown that Malaysia is facing, particularly with a depreciated ringgit and rising prices of goods, the biggest sufferers are those in the low-income and middle-income categories.
“Unlike those who have high salaries and high business revenue, this section of society is acutely hit due to heightened difficulty in buying basic items – food, housing, transportation , education and medical treatment – in the present financial scenario," he added.
Mohideen said some of the countries with inheritance tax (or its equivalent) included the United Kingdom, France, the US, Japan and Germany.
According to the US-based The Tax Foundation, as of 2015, the estate or inheritance tax to lineal heirs in Japan was 55 per cent, South Korea was 50 per cent, France 45 per cent, United Kingdom 40 per cent, United States 40 per cent, Spain 34 per cent and Ireland 33 per cent, while Belgium and Germany both had 30 per cent.
In Asean, Thailand re-introduced inheritance tax on Feb 1, 2016, after 72 years, with the government citing the purpose of the law as being important to increase the tax base for revenue generation to develop the country and upgrade the living of underprivileged people.
"Malaysia abolished estate duty in 1991. Prior to that move, estate duty was applicable only if the net worth of the estate exceeded RM2 million. The rates were 5 per cent on estates worth RM2.4 million, and 10 per cent on everything above that.
"In the present context, the inheritance tax rate for Malaysia should now be at least 50 per cent for estates valued at between RM2 million and RM3 million, with progressive increase as the inheritance amount gets higher.
"We have asserted before that the average Malaysian should not fear the inheritance tax. This is because they do not have to pay a single sen in inheritance tax unless they happen to have assets
rth millions," he noted, stressing that the inheritance tax hits the super-rich, not the ordinary citizens.