DAP calls for the restructuring of the Income Tax laws to increase tax rates on the rich and reduce tax incidence on the lower income groups

Speech by DAP Secretary-General and Member of Parliament for Bandar Melaka, Mr. Lim Kit Siang, at the Negri Sembilan 10th March 1974 at 10 a.m.

1. DAP calls for the restructuring of the Income Tax laws to increase tax rates on the rich and reduce tax incidence on the lower income groups.

One way to bring about greater equality in the distribution of income and wealth in the country is through the use of income tax laws, whereby those on the top income brackets should be heavily taxed to meet the costs of social services and amenities for the poor.

The income tax laws of Malaysia were first introduces by the British colonial government in 1947, and has not been reviewed or revised since then.

The Government should restructure the income tax laws to increase the tax rates payable by those drawing high incomes and reducing the burden on those at the lower income brackets, so that the New Economic Policy of eliminating poverty regardless of race can be implemented in action.

A comparative study of the income structures of Malaysia with other countries, like India and Pakistan, show that the average tax rates applicable to a single person at low levels of income, say below $10,000 per annum, are higher in Malaysia. However, beyond a level of income equal to $15,000 a year, average tax rates in Malaysia are lower than other countries.

This is illogical, and makes a mockery of the New Economic Policy objective to narrow the gap between the haves and have nots, when the ordinary income earners are taxed very heavily in terms of their needs, while the very rich are taxed lightly in relation to their personal needs.

The DAP wants those at the higher income brackets at $20,000 income per annum and above to pat higher income tax rates, while those below the $15,000 income per annum should be given more reliefs to ensure that hardships and privations are not imposed on the lower income groups.

Furthermore, there should be charges in the income tax laws to take into account of the Asian family system, providing reliefs for those supporting their parents – thus relieving the government of the need to provide welfare support to them.

The government must place greater reliance on direct taxation, on the basis of ability to pay, instead of the indiscriminate and inequitable resort to regressive indirect taxation, like Sales Tax and import surtax, which taxes the poor more than the rich.

At present, direct taxes constituted about 31% of total tax revenue. This is insufficient, and should be raised to higher proportions.

2. Deteriorating standards of education in Malaysian schools

With every passing year, the standard of education in Malaysian schools have fallen lower and lower.

I am shocked that parents, teachers and educationists have paid so little attention to this very grave problem, which will be producing an entire generation of Malaysians unsuited to the needs and demands of a modern society.

I urged all Parent-Teacher Associations, Old Boys’ Associations and Boards of Managements to take this grave problem of deteriorating standards of education seriously, and all those who are officials of such associations must feel it his responsibility to do his or her part to try to put an end to the root of the quality of education in our schools.