KUALA LUMPUR (Nov 1): The Barisan Nasional (BN) Opposition coalition has presented its economic framework for the upcoming Budget 2019 today with an expected Government revenue of RM247.18 billion, proposing to reintroduce a 3% Goods and Services Tax (GST) and a slew of proposals for new sources of Government revenue.

The document, however, did not specify the exact amount for expected Government expenditure for the year. Hence, when asked whether this would be a balanced budget, Shadow Finance Minister Khairy Jamaluddin, who presented the ‘Alternative Budget’, said “We are of the opinion now that under Barisan Nasional, while we seek to reduce the Budget deficit, that (balanced budget) is not our priority right now.”

One of the key elements in the proposals, named the People’s Economic Initiatives (Inisiatif Ekonomi Rakyat), is to reintroduce GST at a lower rate of 3%.

“SST was unsuccessful in lowering the prices of goods. That is why in order to have a transparent and efficient tax system, we suggest to reintroduce GST but at 3% compared to 6% previously,” he said, while presenting the Alternative Budget to reporters at the Parliament today.

The Rembau MP estimated that the revenue collected under the reintroduced GST with a lower rate would be as much as SST, but would help shrink the issue of the black economy in Malaysia.

"However, we expect to increase tax collection from those evading tax under SST. From the leakage that can be avoided through the GST system, we expect that we can collect more than SST with a lower tax rate at 3%," he said.

It was noted during the presentation that initial estimation of the black economy in Malaysia is RM30 billion. With the reintroduction of GST at 3%, Khairy said the Government may gain RM20 billion in tax collection, leaving the black economy to be reduced to RM10 billion.

Besides that, BN proposed the establishment of a Fair Works Commission to ensure that wages for ordinary workers are reasonably proportionate to the salary of the employer or manager. Khairy said the commission will take into account various factors such as the sector and location of the company.

“So we will not have a [standard] minimum wage for the whole country. The commission will set a minimum wage based on companies, sectors, territories, and regions, as not all companies are able to pay a high minimum wage,” he said.

Furthermore, BN proposed to restructure the income tax brackets by introducing a new bracket for individuals who earn over RM350,000 and RM500,000 a year which would be taxed at 30% and 32% respectively. Currently, the highest income tax bracket is for individuals earning more than RM250,000 a year.

Following that, BN also suggested to introduce a wealth tax for individuals who accumulate wealth beyond RM10 million yearly either through salary, allowance, properties or investment.

“This is our effort to introduce a progressive tax system on the rich to be distributed to the poor, so that we can reduce the immense wealth gap in our country,” Khairy said.

BN intends to introduce a Tobin tax imposed on short-term stock transactions to manage speculations that could pose a risk to the uncertainty of the stock market.

Other new sources of revenue that wer suggested by BN include the restructuring of levy for foreign workers, a tax on overseas remittances, soda tax, carbon tax, and the plastic bag tax.

Besides the new tax measures, Khairy added that Government should revive infrastructure projects such as the East Coast Rail Link (ECRL) and High Speed Rail (HSR) in order to generate employment opportunities and ensure that regions outside of Kuala Lumpur receive equal development.

“In the face of uncertain global economic conditions, such projects will ensure that there is adequate domestic demand for the employees and services of small and medium enterprises (SMEs).

“We have no objection if the Government wants to renegotiate the price [of the projects], renegotiating the price is a right for the Government, it is normal. But we suggest — and it is not only from BN but PAS also agrees — that the ECRL project should be continued,” he said.