BENJAMIN FRANKLIN wrote: “In this world nothing can be said to be certain, except death and taxes”. 

However, there are exceptions in the case of taxes. There are about 13 countries with no income taxes. But recently, value added tax (VAT) was introduced in Saudi Arabia and the United Arab Emirates.

Tax is a mandatory financial charge or levy imposed upon a taxpayer by the government to fund various public expenditures.  

Historically, taxes were levied on the poor to support the nobility. 

The current model is a social-security system aim to support the poor, disabled, or the retired by taxing those who are still in employment. 

Taxes not only aim to raise revenue for the government but also to alter to affect demand through excise duties and tariffs.

Some are of the view most taxes are immoral due to their involuntary nature. But, there are certain personal allowances and other non-business deductions to taxable income.

However, business deductions and incentives tend to be more favourable over personal allowances.

Are taxes really immoral?

Based on the above points, let us discuss it in the context of our beloved country. 

In 2014, before the implementation of the goods and services tax (GST), the prime minister said GST would not burden the rakyat. 

He added: “Many people are not paying taxes or are paying less than they should.”. 

He said there were only about one million citizens who are paying taxes. GST is likened to antibiotics needed to “cure” the economic illnesses and drive the transformation programmes. 

In November 2017, the deputy finance minister said the base for individual tax payers in Malaysia is small, hence the need for the GST which covers a wider base. 

It will also tax those who can afford to spend. He told the Dewan Rakyat the number of individual income tax payers in Malaysia is small with just 2.3 million people. 

A tax cut in Budget 2018 will reduce the number to about two million. And the number of companies paying taxes is also very low – about 168,000 compared to 1.2 million registered with the Companies Commission of Malaysia (SSM).

Introduced in 2015, some considered GST as a great and fair tax. Apart from widening the revenue base, it will disrupt the informal (non-tax paying) economy in Malaysia and ensured the four million noncitizens in Malaysia will now be paying taxes while enjoying the many  services provided by the government.

Since one of the aims of a tax system is to support the poor, disabled or the retired by taxing those who are still in employment, is it fair to impose GST on unemployed retirees, especially non-government retirees living on their hard-earned savings?

If the number of individual income tax payers is small, isn’t it due to some weaknesses in tax structuring or the low income level of Malaysians? 

Obviously, this will exacerbate economic distortions. 

I am very concerned there is a huge difference between the number of tax payers quoted by the prime minister in 2014 and the number quoted in 2017.

Let us now zero in on Exchange 106 – “the most luxurious office skyscraper”. 

Overall, nationwide, there is a glut for office space and the vacancy rate is in the region of 20% with more coming into the market.

Seeking office rental of RM17 per sq ft (psf), various incentives and favourable tax practices are given in TRX. 

Those who have formally signed up are predominantly from local financial and lending sector. 

If we look at the Bursa Malaysia top five companies by market capitalisation, three are financial institutions.

The point here is, people or entities who could afford luxuries and make a lot of money are given incentives and tax deductions while the “Bottom 40” and unemployed retirees are forced to pay GST. 

How about property-related taxes? The special officer to the prime minister said “property-related taxes are the main cause of increase in cost of living” in Selangor and Penang. 

He added, the higher cost of living is eroding our standards of living and our quality of life and the poor and low-income groups are suffering most of all and badly too. 

I may not accept the above argument entirely but there are some truths there.

On the international front, we have heard about Panama papers or some term it as “Mossack Fonseca papers”. There were some disclosures of tax avoidance and legal impropriety. So are “tax havens”.

Given the above, isn’t taxation an act of compulsion? Higher taxation means more compulsion. 

The habit of clothing it in fine words hides the fact taxation is the confiscation of our property by people who prefer to spend it on their priorities rather than ours or the masses. 

So, are taxes really immoral?

What say you … – January 30, 2018.

* Saleh Mohammed reads The Malaysian Insight

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.