Windfall profits tax should be imposed to support economic recovery


This would allow the government to deal with the health crisis without imposing an additional burden on the public by introducing a new tax such as the GST.

by ASILA JALIL / photo by HUSSEIN SHAHARUDDIN

THE government must impose a windfall tax on businesses that derive extraordinary benefits from the pandemic to aid economic recovery and help those who have lost their source of income.

Former Prime Minister (PM) Tun Dr Mahathir Mohamad (Photo) said the exceptional tax is not a new measure and that it would allow the government to deal with the health crisis without placing an additional burden on the population.

“The windfall tax is not something extraordinary. This will help the government because in this current time it has to spend more to help the poor and those who have lost their income, ”he said at a virtual forum hosted by Reset Malaysia yesterday.

He believes that there is no need to put in place other taxes on the public such as the goods and services tax (GST) which has been abolished.

New taxes on the public would not solve the decline in the economy facing the country, as they would only add more burden to individuals and businesses that have collapsed due to Covid-19, said the Member of Parliament for Langkawi.

Last year, rubber glove makers reaped supernatural profits from the surge in demand and selling price for rubber gloves around the world due to the pandemic.

The government did not impose a windfall profit levy, however, as Deputy Finance Minister II Mohd Shahar Abdullah said it could give investors a negative perception that the government is taking profits from companies as a result of the global health crisis.

Economist Prof Dr Jomo Kwame Sundaram said the windfall tax is needed to help the country’s recovery process in the short term.

He noted several flaws in the current tax system which focuses only on indirect taxes instead of direct taxes.

“We need a long-term progressive tax system. In the meantime, in the short term, the government should impose an exceptional tax. There is no reason for its implementation to be further delayed.

He said the government should not be afraid to spend more to stop the spread of the deadly virus in the country.

Developing countries, including Malaysia, are too afraid to make the necessary expenses to deal with the virus and the Malaysian government is only focused on implementing various levels of movement control ordinances to fight infections. increasing.

“We have to spend money to fight Covid and it has to be done the right way.

“However, the public may not be confident in how the Malaysian government will spend, especially after seeing how the administration came to power,” Jomo said.

Economist Dr Nungsari Ahmad Radhi urged the government to use its available instruments such as the tax system to revive the economy and spur post-pandemic growth.

He said if the government did not use necessary measures such as imposing a windfall profit tax, the pandemic would further strain its coffers and prevent it from helping vulnerable people.

Besides imposing the tax, he said the government should not be afraid of the country’s rating by rating agencies if it develops a deficit, as the borrowed money will be used for clawback purposes.

“He should not worry about the deficit he will have because the interest rate is currently low and the government must be careful in its spending, so that it can generate growth at a rate higher than the rate at which he made the loan.

“There is no need to be afraid of the rating agency if we are explaining why we need the deficit and how we are spending it.”

He said that if the government were careful with its spending, it would also eliminate suspicions of corruption and mismanagement of funds earmarked for post-pandemic recovery.

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