Tuesday, June 24, 2008

Where is all the tax money going?

Ganesh Jun 23, 08 4:36pm

An average Malaysian, besides food and his silly car loan, spends the bulk of his money on education and health. However, in a country which is so rich in resources and wealth, I cannot see why the government is not building more hospitals and universities and actually providing free healthcare and free education.

In comparison, the UK has only double the population of Malaysia but it has hundreds of universities and hundreds of free hospitals.

After all, our government gets a lot of revenue from sources that other social state countries like the UK don't like high taxes from cars etc. Some writer did some calculations and estimated that since the inception of high car taxes, the taxes collected from the purchase of new cars alone would be some RM170 billion to date.

Malaysia is rich in resources. In fact, many say, Malaysia is one of the richest countries in the world with natural resources, for example, oil, gas, oil palm, rubber, tin, gold. The UK does not have all these luxuries. For a country that is so rich, why are there so few hospitals and universities?

We are fortunate to have oil revenue. For the financial year ended March 31, 2007 (FY07), Petronas alone posted a net profit of RM46.4bil (and that is the old oil price). This year how much? RM100 billion maybe?

And mind you, that RM46.4 billion is net profit meaning that tens of billions have already been paid in tax to the government. This is just one company, what about the hundreds of companies listed on the Bursa which pays billions in taxes? Company tax is a very good source of revenue for the government.

Khazanah, the recent investment arm of the government, recently announced that its net worth now is RM53billion. Khazanah owns substantial stakes in companies. By holding large amounts of shares, I am sure it gets hundreds of millions in dividends.

The same with the EPF. The EPF invests the rakyat's money, besides giving an interest on our balance and it makes substantial profit.

I do not want to elaborate on sales tax though it is a substantial form of revenue but I would like to touch on stamp duty. I remember paying about RM20,000 in stamp duty when I bought my house recently.

And I am just one person. What about the thousands who transact property everyday? Thousands of sale and purchase agreements for properties are done daily.
Stamp duty alone is this formula:

i) for the 1st RM100,000.000 - 1% i.e. 1/100 x RM100,000.00 = RM1,000

ii) for the next RM400,000.00 or part thereof - 2% i.e. 2/100 x RM400,000.00=RM8,000

iii) above RM500,000.00 - 3% i.e. 3/100 x any sum above RM500,000

So,the government makes loads of money from just stamp duty on property alone. Maybe its high time to channel a substantial sum to building more universities and hospitals?

And don't forget personal income tax which also brings in billions. The list goes on, house assessment rates, quit rent, road tax etc.

Malaysia is blessed with little calamities. Unlike other countries where there are earthquakes and tornados which cause billions in damage, we don't have to fork out a lot of money to repair damaged infrastructure or in aid for victims of natural calamities.

Just where is all the government revenue going?

http://www.malaysiakini.com/letters/84904

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