Higher tax rate for top-earners an ‘insurance’ for stable society, says DAP strategist
PETALING JAYA: Higher income tax on the super-rich should be seen as the “insurance” needed to maintain a stable society, according to the chairman of the Research for Social Advancement Centre (Refsa) Liew Chin Tong.
Speaking at a recent Refsa podcast on inequality and jobs, Liew said asset prices in the country had “skyrocketed” since 2010, with stagnant wages and the increasing cost of private education and healthcare creating inequality and “hidden suffering” that had not been managed adequately.
Saying Malaysia currently had a “triangle society” with a large base of low-income families, the DAP strategist added that creating a “diamond society” – with a large number of middle-income families and fewer low-incomes ones – would allow the country to approach inequality differently.
“For example, we can tax the top 1 or 2% with a higher rate. For them to be taxed with a higher rate, in a way it’s like paying (an) insurance premium,” he said.
“For people who are at the top 1 or 2%, if they are able to make a huge amount of money from society, they will need society to be stable.
“No riots, no trouble, good education, people are healthy.”
Liew, a former deputy defence minister under the Pakatan Harapan administration, said the state could then use the taxes derived from the country’s top earners to run strong defence, social security and healthcare systems.
“I think that it’s worthy and good for everyone.”
The marginal tax rate on earnings above RM100,000 per year is currently 21% while those who earn above RM1,000,000 per year are taxed 28%.
The government introduced a 30% tax rate on those earning over RM2 million a year when tabling Budget 2020, with then finance minister Lim Guan Eng stating that the increase would affect approximately 2,000 of the top income earners in the country.
By comparison, those who earn above RM50,000 per year are taxed 8%, with Liew previously using this as proof that the middle-class bears a disproportionate share of the tax burden.
Stating that only 15-16% of Malaysians currently pay income tax, Liew argued that the ultimate aim of increasing taxes on the top 1-2% was an expansion of Malaysia’s middle class – which would then allow the government to collect more tax from the group. - FMT
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