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Malaysia should work through Asean to reform region’s tax system

With higher corporate tax rates, these countries, including Malaysia, will gain more funds, making it a win-win situation for the region

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By Raveen Jeyakumar

Malaysia’s membership in Asean should provide it with an avenue to consult member countries on how to stop the race to the bottom in corporate tax rates.

The existing economic and taxation system favours foreign investors and multinational companies.

Malaysia’s major competitors for foreign direct investment are Thailand, Indonesia, the Philippines and Vietnam.

Like Malaysia, these countries experience budget deficit problems. They lack funds to implement programmes that would strengthen their social safety nets.

Not enough money makes it hard to use solar, hydro and wind power to make electricity.

To reduce petrol consumption by private cars, governments must provide better public transport services. The infrastructure needed to provide these services requires money.

But, to avoid losing foreign investments, countries dare not increase corporate taxes to raise funds. In fact, to attract more investments, some countries reduce their tax rates.

The situation would be different if Asean countries unite and raise their tax rates collectively. With higher corporate tax rates, these countries, including Malaysia, will gain more funds, making it a win-win situation for the region.

These extra funds will improve the people’s quality of life. Many in Malaysia, especially the low-income and lower-middle-income groups, experience economic hardship. Unfortunately, some quarters use fear-mongering to create racial and religious tensions among the people.

With more money raised through higher taxes, the government will be able to launch pro-people measures to raise the people’s quality of life.

Some of these measures:

  • Increase the minimum wage to a fairer level
  • Set up trust funds with government funds to provide for basic needs and services to the low-income and lower-middle-income groups. Focus on low-income housing, education and healthcare
  • Provide help in terms of finance, infrastructure, skills training and access to large markets for small and medium-sized companies (SMEs)
  • Provide a RM500 monthly pension to retirees aged 65 and above among the low-income and middle-income groups
  • Get local councils to take over of the management and maintenance of low-income flats throughout the country
  • Strengthen programmes to develop, maintain and upgrade public facilities and housing for rural folk
READ MORE:  Six reasons why Malaysia should rely less on foreign investment

The authorities must not pander to the multinationals. Get those reaping super-profits to pay more taxes. The government’s mission to wipe out corruption and curb fund wastage is crucial.

Fix the broken and one-sided economic and taxation system. Increase taxes to gain much-needed funds to implement effective pro-people programmes.

Implement these programmes to reduce people’s insecurities. This will pave the way for society to thrive.

Raveen Jeyakumar, an Ipoh-based Aliran volunteer, is a writer who is passionate about social and environmental issues. His work can be found at reform-the-system.com

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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