New RM2m tax band to raise RM100m in tax revenue, says Finance Minister

Lim: The World Bank figured that our top marginal tax rate for the country is too low compared with other neighbouring countries and advised us to increase it. Even by increasing the income tax [for those earning above RM2 million] to 30%, we are still among the lowest. (Photo by: Patrick Goh/The Edge)

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KUALA LUMPUR (Oct 14): Finance Minister Lim Guan Eng said the new 30% income tax band for those earning above RM2 million, which is expected to affect 2,000 individuals, will raise about RM100 million in tax revenue.

Wong Sue Wan, partner at Wong & Partners, had posed questions on the new tax band to the minister during a question and answer session at the Budget 2020 Forum today, She also asked whether there is a need to raise government revenue in the long run.

Lim said the proposal for the increase in tax was made by World Bank.

"The World Bank figured that our top marginal tax rate for the country is too low compared with other neighbouring countries and advised us to increase it. Even by increasing the income tax [for those earning above RM2 million] to 30%, we are still among the lowest," said the minister.

He added that the wealthy should be able to afford the two percentage point increase in tax, and said this would contribute to economic growth, which will in turn grow the income of the wealthy and hence cover the marginal rise in tax.

"Perhaps you could let us know how much you intend to raise [via the new tax bracket]?" asked Wong.

"I don't think it would be that much. We are looking at probably around RM100 million," said Lim.

Wong then asked whether this would be the first step towards higher taxes in the future. Although Lim did not comment on whether the government is looking at it, he made it clear that there would not be any wealth or inheritance taxes in the works.