KUALA LUMPUR: The National House Buyers Association (HBA) has asked the government to consider granting an income tax “wholesome” waiver or a reduction of 50% for the first RM100,000 of chargeable income tax for the next two years.
The suggested amount is the threshold to receive the RM30 e-wallet in Budget 2020 and RM50 under the ePenjana initiatives.
HBA honorary secretary-general Chang Kim Loong said based on the chargeable income of RM100,000 and the tax rate for 2020, the income tax payable is RM10,900 or about RM908 a month.
“Our proposal for a 50% tax reduction/waiver will translate into annual tax savings of RM5,450 or additional disposable income of RM454 per month which will greatly add to the monthly cash flow and result in a boost to retail spending and uplift the economy,” he said.
However, Chang said the 50% income tax reduction should not be restricted to those earning below RM100,000 but applicable to the first RM100,000, meaning anyone earning more than RM100,000 would also be able to enjoy this proposed temporary tax reduction/waiver.
“Many people who supposedly earn more than RM100,000 a year are just salaried employees who are in the ‘sandwich’ group, supporting elderly parents and young children, and consider themselves to still be in the ‘middle income’ group although they may fall under the so-called Medium 40 (M40) group or even Top 20 (T20) group,” he said.
Noting that the Covid-19 pandemic not only impacted the Bottom 40 (B40) income group, he said the proposal is not asking the government to provide “handouts” or cash assistance.
Instead, it is to acknowledge that the middle-income segment is also affected by the Covid-19 epidemic, which it hopes the government could give temporary tax relief during this difficult period.
Chang also hoped the government would consider giving tax reliefs to small and medium enterprises (SMEs). He said companies could reduce headcount to cut costs but they have to also pay corporate income taxes so long as they record a taxable profit.
SMEs are currently taxed at 17% for the first RM600,000 in taxable income and the balance at 24%.
“The government could consider giving a 100% tax relief on the first RM1 million in taxable income and the balance to be taxed at 24% for the next three years.
“However, this tax relief should come with some strings attached which is, the said SME should not retrench any local employees during the tax relief period,” he added.