FRIDAY-22 AUGUST 2008- INCOME REBATES LIKELY

Income rebates likely

Expert says more Malaysians may pay ZERO TAX with difficult situation

PETALING JAYA:

The Government will likely widen the zero tax percent band and increase individual income rebates in the 2009 Budget in a move to cushion the impact of the higher living cost particularly for the low-income group, according to a tax expert. Deloitte Malaysia’s tax leader Ronnie Tim said this would provide additional disposable income for he group, especially those facing difficulties in coping with higher expenditure due to the recent oil price hike and slower economic growth. “If we increase the tax band, then more people will pay zero tax. I’m thinking on a suggestion of a person earning up to RM35,000 a year and don’t have to pay any tax,” he told reporters after the launch of Deloitte Tax Challenge 2008. Lim was responding to a question on the insight of Budget 2009 to be tabled by Prime Minister Datuk Seri Abdullah Ahmad Badawi in Parliament on Aug 29. Currently, Malaysians earning RM35,000 a year are paying abour RM1,400 in income tax and if this exemption is given, these people could use the extra RM100 to RM200 a month for other purposes. According to the Inland Revenue Board’s income tax band, only people earning below RM2,500 a month is zero percent taxable. For the rebate, Lim suggested a three-fold increase from the current RM350 for a person. “This will provide immediate purchasing power to the people, especially the lower income group,” he said. On short-and medium-term basis, he said, the Government should consider giving grants to people who want to convert their petrol engine to natural gas as a one-off subsidy to cushion the rising cost due to high petrol prices. Citing Australia as an example, he said, the Government could save substantially as it is in efficient way to reduce costs compared to giving refunds and rebates which was costly. ”Gas will cost about seven-and-a-half-sen a kilometer versus 20-odd sen per km on petrol. Straight away, we can see the advantage for an individual,” he said. On Deloitte Tax Challenge, Lim said the contest would likely rekindle interest among the younger generation in accounting and as an initial step towards producing quality tax practitioners and consultants. Participants of the challenge comprising two categories - team and individual - will have to solve complex business problems that arise in everyday tax practices such as mergers and acquisitions, foreign direct investments into Malaysia and restructuring. Contestants will also be tested in English, verbal presentations and leadership skills, he said. Bernama.