PETALING JAYA: The Consumers Association of Penang (CAP) today expressed regret that the government has decided not to reintroduce the inheritance tax.
CAP acting president Mohideen Abdul Kader said the inheritance tax would help reduce the gap between the haves and the have nots.
He said in a statement that the best way to tackle wealth inequality was through the use of taxation, especially that of inheritance tax.
“Implemented properly, inheritance tax (as well as other relevant forms of taxation like wealth tax, capital gains tax and gift tax) provides important revenue for state coffers from the highly rich, and not from those in lower income brackets.”
Inheritance tax is assessed on the net worth of an individual at death, but only those estates above a certain value are taxed.
“The growing disparity between the haves and the have-nots is not acceptable. People who work hard and toil over long hours pay taxes, while those who gain fortunes by not doing work and instead merely inheriting them from someone else do not have to pay tax. This is in principle unfair and unjust.”
He noted that countries with inheritance tax or its equivalent include the United Kingdom, Thailand, France, US, Japan and Germany.
“Malaysia abolished estate duty in 1991. Prior to that move, estate duty was applicable only if the net worth of the estate exceeded RM2 million. The rates were 5% on estates worth RM2.4 million, and 10% on everything above that.
“But before that, it used to be that the estate duties were more progressive with various tax rates for different bands of valuation of the estate, something like our income tax.
“In the present context, the inheritance tax rate for Malaysia should now be at least 50% for estates valued at between RM2 million and RM3 million, with progressive increases as the inheritance amount gets higher.”
Mohideen said the average Malaysian should not fear the inheritance tax as it “hits the super-rich not the ordinary citizen”.