PUTRAJAYA is likely to introduce three new taxes on inheritance, soda and capital gains, which can stabilise the nation’s finances and recover the shortfall caused by the removal of the goods and services tax (GST).

Tax expert Koong Lin Loong said while the removal of the GST had reduced the government’s revenue by about RM40 billion a year, the deficit could be easily recovered by diversifying the country’s revenue stream.

He said this was why Prime Minister Dr Mahathir Mohamad has mooted new taxes to pay off the RM1 trillion national debt.

Koong, who is Konsult Taxation Sdn Bhd managing partner, said although the government would come under fire from the opposition for the taxes, the revenue would stabilise Malaysia’s finances.

“This will allow the government to raise new revenue to repay the massive debts incurred by the previous administration, and it also helps to stabilise the country’s financial situation,” he told The Malaysian Insight.

The new taxes are expected to be introduced in the budget tabled in November.

Koong said transactions such as the buying and selling of antiques had so far escaped the notice of the taxman in the absence of the capital gains tax.

“Of course, it is only the rich who collect antiques and who will be affected (by the capital gains tax). The people at large will not be affected much.”

The inheritance tax was a more familiar scheme, having been collected and scrapped many years ago.

He said it was possible that it would be re-introduced, which would affect mainly the high-income group, such as when parents leave to their children property exceeding a certain value.

Koong said he personally opposed these taxes unless the government also adjusted the tax regime to leave the middle-income group with more disposable cash, as Malaysians were already taxed a lot individually.

“This (tax adjustment)  will drive consumption, and if there is more cash circulating within the economy, then it will drive development,” he said.

Koong said the people were paying too much income tax, especially expatriates who were taxed 28 sen for every ringgit earned.

He said reducing the taxes for foreigners would attract more skilled workers fro abroad to contribute to the national coffers.

On the soda tax, which Finance Ministry special officer Tony Pua said the government was considering, Koong said it was likely as the government was trying to get the people to cut their sugar intake.

However, as the taxes on tobacco and alcohol have shown, those who wish to partake will do so regardless of how much they are taxed for it, he said.

Dr Mahathir had said in his keynote speech at the “Malaysia: A New Dawn” conference earlier this week that the previous government had left behind huge debts which had turned Malaysia from an Asian tiger into a small kitten.

He said the government was planning to implement new taxes to pay off the RM1 trillion national debt, but did not reveal details on those taxes.

The PH administration removed GST in June as pledged during the election but replaced it with the sales and services tax after a three-month tax holiday. – October 13, 2018.