2021 is going to be a very challenging budget. The government is actually fragile, the economy is actually slowing down and it has already slowed down.
The companies are struggling, especially the SMEs. The SMEs need cash injections, they need cash grants, they need tax reductions. When it comes to tax, I would propose that the tax rate from 17% now for small companies be reduced to maybe 15% or 14%. They need cash grants for the digitalization of their business to transform the business into a new era and they can do it very quickly. These are nimble businesses but they need help at the moment to also retain their employees. They need cash subsidies. So wherever possible, there must be tax deductions given in order to digitalize the business and to help them retain the people. It can be in the form of cash grants or tax reductions.
When it comes to individuals, individuals also need cash in hand. There is already a direct transfer of cash for the B40 and that should continue. For the M40 who are paying the tax, you must give them a one-off rebate and it should be given this year. This means if they have already filed their returns for 2019 so that the taxes are in the 2020 taxes, they need to get the cash back. You have to find a way of giving them back the cash in terms of reducing their tax liability. Give them back some of that cash. That’s number 1.
Number 2, you should also be able to give them tax deductions for retraining themselves. If they want to re-educate themselves or move up, especially the senior people who are above 65-70, or to learn about the internet, you’ve got to give them a break. You may want to give them a tax deduction if they’re paying taxes. Otherwise, we need to find a way of giving them cash grants to help them.
The other thing that you need to consider is the GST. I think it’s a good time to reintroduce it because SST has its own problems – it is a cascading tax. On the other hand, GST will be much more efficient. The rate of tax should be maybe 3% or 4%, and it’s a good means to actually increase some tax revenues to the government. The government needs revenue and the government cannot simply be giving away money to the people without having sources of funds.
You can’t keep on borrowing. You need to raise money. As for the people who actually are generating the income and have the wealth, we need to think about taxing them. This is an ideal time to actually start seriously thinking about taxing the extreme wealthy with a wealth tax or an inheritance tax. Those are proposals that you should seriously consider. I would urge the government to think about it.
The property sector is really down and so the RPGT rates should be reduced quite dramatically from the top 30% to maybe 20% and each bracket is to be lowered down. This is so that property activity can be reignited in the economy.
One more thing that you need to think about is actually cash because lots of people have savings. People haven’t spent the money saved. You’ve got to mobilize the savings and put them into productive expenses like development expenditure so that the government could go out and borrow from the people who are actually saving. Give them a slightly higher interest rate. Interest rates are now 1.75% and are even expected to drop. Give them a higher interest rate to mobilize the funds and re-employ them. Good infrastructure projects will be productive for the country, but there must be no leakage. That’s very important otherwise it’s wasted money.
Finally, I would say to both income tax and the customs, please be more lenient when it comes to instalment payments. People want to pay their taxes. Allow them a longer period to pay and the leeway to actually extend. Don’t press them. If you kill the golden goose that lays the eggs, you are actually killing the source of your future funds to run the government. So I would urge both of them to exercise greater leniency than they are doing now because, at the moment, they seem to be on a cash collection drive.
In light of all these, these are the sort of measures we need to take and I hope the finance minister will think about this very carefully. Finally, he has to get money into the economy and bring confidence to the people to spend that money into the economy. There’s no point going into savings.
Ladies and gentlemen, I hope the budget will be a good one where there’ll be a lot more money into the market. Thank you.