Friday August 31, 2012
Happy Birthday Malaysia
Comment by ANG WEINA
A BIRTHDAY wish is always a must-do for any birthday. So this is said by everyone. I always wonder why only on a birthday? Isn't a wish a desire or hope for something to happen? I am sure Datuk Lee Chong Wei had the earnest wish to win the Olympic gold medal and so did all Malaysians who prayed that his wish would come true (for the benefit of the readers, the writer had written this article before the event).
The same wish list makes its rounds about this time of the year when the Finance Ministry garners “wishes” for the preparation of the upcoming Budget 2013, scheduled for announcement on Sept 28. Various professional bodies and industry representatives have by this time prepared and submitted their memorandum of wishes.
Being a tax professional, we are often asked what Budget 2013 will entail. At times, we get the shocking look when we reply that their guess is as good as ours. Putting the professional viewpoint aside, I thought I would also present my little wish list as a working rakyat. I will not act like a wailing child kicking a fuss and making a scene as we often see at Toys R Us; I need to be mindful of the current state of our budget, reported at a deficit equal to 5.3% of the country's gross domestic product in 2011.
A budget deficit occurs when a government spends more money than it takes in. The chart shows the historical data for the country's budget. With the worst dip in 2010, it is gratifying to see improvements and the continuing commitment by the Government to reduce the deficit.
It is not rocket science for any working rakyat to want or rather wish for a larger disposal income. So, how do we achieve this? One of the ways is to reduce statutory deduction for example, monthly tax deduction, contribution to EPF and Socso or expanding the tax reliefs etc. Albeit a simple arithmetic, is it logical and reasonably possible?
1. Lower tax rate: Reducing EPF contributions will have its consequences when we reach retirement, and there are already grievances that the current contributions are inadequate to see us through our golden years. Is reducing personal income tax rates an option? By comparison with the regions in Asia Pacific (see table) with the exceptions of Singapore and Hong Kong, our top level tax rate of 26% is, in fact, passable.
It is without doubt that a lower tax rate will attract talent. If we do not offer attractive effective tax rates and affordable costs of living, we will lose our talent. Less than three years ago, my favourite Penang assam laksa at Paramount Gardens used to cost RM3.80. Today, it is RM4.30 with the same amount of noodles and kembong fish. In relative terms, I can still get my favourite char kway teow at Albert Street Hawker Centre in Singapore at S$2.50. Can we still get any decent meals nowadays in KL for RM2.50?
For a working rakyat, the challenges are plentiful, ranging from managing the rising costs of living, securing an affordable roof over the head, ensuring decent education for the children, providing healthcare for the elders to building a nest for retirement.
If we compare what the region offers in personal tax deductions with what we currently have, some of the deductions do make some sense and my personal wish is for the Finance Minister to at least give it a thought.
2. Flexibility to top up yet enjoy reductions: I wish I will save enough to enjoy my retirement. I should therefore be allowed to top up (in addition to the statutory contribution) when I am still in employment and can afford to do so. Then the additional top-up should also be entitled for further personal tax deduction. If my employer decides to contribute to my top-up, consider granting the similar deduction. The top-up option should also be extended to family members' retirement accounts with similar deductions be accorded.
3. Levies deduction and elderly care-giver relief: I wish to continue contributing to the workforce. I have the skills and competencies but I also have the worry who will mind my children when I am at work? I have to partially sacrifice my income for not only the hefty agent fees but also for the foreign maid levies. The least that will make me feel appreciated as a working mother is a deduction of the levies paid against my gross income, similar to what I would enjoy for the donations I made.
I am grateful to have my parents' help in taking care of my children. Their presence is invaluable, especially to provide the ease of mind to me as a working mother. Why not allow a minimal elderly care-giver relief as they are as good, if not better, than any foreign maid?
4. Reinstate deductions for interest payments: I wish to have a decent home. The skyrocket house prices are not helping. It is not surprising that loan interest obligations take up a huge percentage of the monthly disposal income. In previous budgets, interest payments used to qualify for personal tax deduction but ceases by the year of assessment 2010. It is probably timely to have this reinstated. A deduction even with a capped amount will help.
So, as I hum along the tune of “Wishing Upon A Star” and recollect its lyrics:
When you wish upon a star
Makes no difference who you are
Anything your heart desires
Will come to you
I know my wish for Budget 2013 may not make any difference but at least I know I had made a wish.
And not forgetting, Happy Birthday Malaysia, Happy Merdeka! At least you made your wish for independence 55 years ago!