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Expert: Income gap will widen unless drastic steps taken

 | July 14, 2017

Quality education key to helping those in the low-income group acquire skills and improving such skills as well as making other gains, says tax consultant Kang Beng Hoe.

Kang-Beng-Hoe--1PETALING JAYA: A tax expert says income disparity in the country is only set to worsen unless the government reduces the income gap between the rich and the poor.

Tax consultant Kang Beng Hoe said Malaysia is still a low-income country although the government has stated the per capita income is high.

“But that is based on the average of high income versus low income.

“When you take the average, it may be high but it does not hide the fact there is a large segment of the low-income group who are not earning enough to make a decent living,” he told FMT.

Prime Minister Najib Razak had said Malaysia’s per capita income had gone up since 2010 from RM28,000 to RM36,000 a year.

Referring to the Gini coefficient, a way to measure the income gap between the rich and poor, Kang said Malaysia’s Gini coefficient was among the highest in Asia.

In 2012, media reports stated Malaysia ranked 39th most unequal nation out of the 159 nations and third in Asia.

“Malaysia’s coefficient is higher than Indonesia.

“In Indonesia, there may be more poorer people than the rich but the disparity is not that high.

“One way for the Malaysian government to narrow the gap is by improving the income of the lower-income group.”

However, he said the gap can only be reduced once the government starts to offer quality education.

At present, he said the government is expanding the scope of schooling by providing free education and books but the country needs quality education.

“It is not about gaining more PhDs. They are not the workers.

“There needs to be more focus on acquiring skills, more focus on Maths and Science.

“But our graduates are still lacking basics such as communication skills, causing employers to complain about the quality of our graduates,” Kang said.

He gave an example of Taiwan where the country in the last 50 years has had rapid progress in producing superior products, such as cellphones and computers.

“They were once known as copycats of US products. One of the things they did was focus on Maths and Science,” he said.

Kang said another way of reducing the income gap between the rich and poor was by lowering the taxes paid by the poor.

“We need good government policies and proper taxation where the rich pay higher tax than the poor.

“Since the implementation of GST, the poor feel the impact of the consumption tax more than the rich.”

Due to that, he said the GST was not a progressive tax.

He said a poor person who earned RM1,000 a month would spend 90% on transport and food.

He said it would be different for a person who earned RM20,000 as the person would not feel the pinch as much as the poor.

Due to that, he said the government needed to look at ways to improve the skills of the poor so that they could earn more.


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