INTRODUCING a new transaction tax on property buyers and sellers to help the government refill its Covid-19 ravaged coffers might not be the best move, Real Estate and Housing Developers’ Association president Soam Heng Choon said.

Heng was commenting on suggestions that the government should impose a 2% transaction tax on property deals, split equally between buyer and seller.

“This suggestion is to help the government find income, but is it the right time?” Soam asked.

“On one hand you are trying to help buyers own a home, but on the other hand you are trying to get extra income.

“Is it substantial enough to send the whole industry into a tailspin?”

Heng said buyers are already pressured by the current property prices and wanted to know how they are expected come up with the extra 1%.

“Let the economy and industry recover first. If this tax is introduced, we have a spill-over effect into 100 other industries that are linked to the property sector.

“Look at it in a wholesome manner before you impose this tax and cause problems to other industries as well.”

Malaysia does not impose any taxes when it comes to buying new property, but homeowners are required to pay stamp duty, which is variable depending on the price of the property.

However, the government has given stamp duty exemptions for first time homeowners.

Besides the transaction tax, other suggested levies include introducing a windfall tax on businesses whose profits grew during the epidemic.

The government has as, of July 2021, only collected RM67.4 billion in direct tax (or 56.2% of the target), and RM24.8 billion in indirect tax (59% of the target).

In a pre-Budget briefing by the Ministry of Finance, Minister Tengku Zafrul Tengku Abdul Aziz said the government is looking for measures that could be used to increase tax collection through increased tax compliance to boost the government’s coffers.

The three potential strategies outlined were the special voluntary disclosure programme for indirect taxes administered by the Royal Malaysian Customs Department.

It is also mulling implementing the tax identification number and reviewing treatment of taxes flagged for revenue leakage or harmful practices.

Budget 2022 will be tabled in Parliament on October 29. – October 22, 2021.