Fears over RON95 subsidy cuts grow - MCA warns Anwar against price spikes, inheritance tax, urges 'phased' minimum wage rise
Written by Lawrence Low
KUALA LUMPUR (politicsnowmy.blogspot.com) - 7 Recommendations for Budget 2025 including tiered implementation of RON95 subsidies withdrawal and minimum wage reforms.
With the upcoming Budget 2025 and the government's need to boost fiscal revenue whereby a new tax system might be introduced, the MCA Economic and SMEs Affairs Committee believes that reinstating the Goods and Services Tax (GST) is the most direct and structured solution.
Over 160 countries worldwide have implemented GST/VAT, stabilising their fiscal foundations. For Malaysia, the GST’s return should start at a rate below 4%, allowing the public time to adjust. This could reduce the national deficit by 3% to 5%, revitalise the stock market, and drive long-term growth. Many businesses support a lower GST rate and propose a 6-to-12-month preparation period, along with a streamlined GST refund system from the government.
The anticipated changes to the RON95 petrol subsidy, a key concern affecting everyday Malaysians, must be handled carefully. The government must phase out subsidies gradually, preventing sharp price increases that could heavily burden the people. A one-time removal risks triggering social issues across the board.
As for the minimum wage, currently set at RM1,500, we recommend a phased approach to any increases to reduce the strain on small and medium-sized enterprises (SMEs). Tailoring the minimum wage based on state or business size may also help balance business viability and employee welfare, especially in slower economic regions.
Our Committee also calls for extending the full rollout of the electronic invoicing system to 2027, giving small businesses more time to adjust. We suggest raising the exemption threshold from RM150,000 to RM500,000, allowing voluntary participation and gradually narrowing the scope until it is fully implemented.
As Chairman of the MCA Economic and SMEs Affairs Committee, I also emphasise the concerns of SMEs, which have long encountered policy uncertainties. Frequent policy changes heighten operational costs and undermine business confidence.
We urge the government to improve the business environment through tax reductions, incentives, simplified loan and tax processes, and better access to low-interest loans and financing.
Attracting foreign investment is important, but we must also protect local businesses competitiveness. The government should ensure that foreign companies create local jobs, transfer technology, and prevent market monopolisation. Expanding exports through foreign investments would also bring long-term benefits.
On talent development, we call for strengthening technical and vocational education (TVET) to address the talent shortage, especially in high-tech and innovation sectors. Collaboration between industries and educational institutions will ensure businesses have access to skilled workers.
Regarding new tax systems in Budget 2025, including the proposed inheritance tax, our Committee strongly opposes its implementation. An inheritance tax could lead to premature asset transfers to evade taxes, potentially causing societal problems, such as elderly abandonment.
Additionally, wealthy individuals may transfer assets abroad, negatively impacting the economy.
We believe this tax would be unfair to homebuyers, particularly those investing in real estate for their children.
Finally, the government must address the needs of low-income groups outside the civil service.
Currently, the Welfare Department provides only RM500 monthly to vulnerable groups, such as the elderly and disabled, which is insufficient given rising living costs. We propose increasing this assistance to RM1,000, depending on the nation’s fiscal capacity.
Written by Lawrence Low, MCA Vice President
https://politicsnowmy.blogspot.com/
Comments