KUALA LUMPUR― What are employees and employers in the private sector hoping for in the Pakatan Harapan government’s maiden annual Budget?

Ahead of Budget 2019’s tabling this Friday, Malay Mail looks at what they have to say ― just shortly after the tax holiday ended with the reintroduction of the Sales and Services Tax regime and after an announced hike to minimum wage to RM1,050 effective next year:

The Malaysian Trades Union Congress (MTUC) proposed for the mandatory retirement age to be increased from the current 60 years (in force since 2012) to 65 years instead, noting that many continue to work past the official retirement age due to inadequate savings and the need to financially support their children even after retirement.

“In view of the depressed wages in Malaysia for the last 61 years, the savings of the EPF is insufficient for the B40 and M40,” it said, adding that those who wish to voluntarily retire at age 60 should be allowed to do so.

Other points on MTUC’s wishlist are:

― Disallow the use of EPF funds for anti-union companies

Stressing that Malaysian workers are the ones contributing to the EPF retirement fund, MTUC insisted that the government amend policies to ensure such funds are not invested in any companies “whose conduct of their businesses and activities are anti-union and anti-labour in nature.”

― Mandatory financial education at schools, workplace

MTUC said this was urgently needed as 70 per cent of the nearly 300,000 Malaysians facing bankruptcy are from the 35-45 age group, urging for new laws to compel employers to run free financial education courses for their staff every year to “promote better personal financial management.”

“MTUC also urges the Government to introduce the appropriate syllabus into the education system where students learn from a young age how to manage their finances, as the country endeavours to turn into a high-income nation,” it said.

― Access to child care

MTUC sought for allocations in Budget 2019 to go the appropriate ministry or non-governmental organisations for the “setting up of affordable, good quality child care centres that are easily accessible especially to workers in the low and medium-income groups.”

Among other things, MTUC also wants interest-free housing loans for the low- and mid-income groups; a land and housing regulatory authority (LHRA) for a full blueprint on the demand and supply of affordable housing; paid leave for male and female employees of one month and 90 days after the birth of a child (up to five children for women); free school bus services and free tertiary education especially for the low- and mid-income groups.

Less tax for Malaysians and companies

The Associated Chinese Chambers of Commerce and Industry of Malaysia (Accim) wants the government to stimulate domestic consumer spending through measures such as: increasing personal tax relief for individuals from RM9,000 to RM10,000; and lowering the personal income tax rate to ease the burden of low- and middle-income households.

Accim also wanted a business-friendly environment, proposing that the government introduce staggered cuts in the corporate tax rate from the current 24 per cent to 18 per cent, and to also reduce the tax rate for small and medium enterprises (SMEs) to 15 per cent for the first RM2 million chargeable income.

What Accim does not want is the introduction of new taxes in the form of inheritance tax and capital gains tax, claiming that it would hurt economic growth in Malaysia. It said such taxes would stifle wealth creation and the expansion of family businesses, and also cause capital outflows with companies and investors pushed to shift their assets and investments abroad.

“We believe that it is through enhancing corporates’ competitiveness, flourishing their growth and profits, more revenue will be collected by the government instead of widening the tax base or increase any tax rate to increase the government revenue,” it said, describing this as a long-term policy that would have a mutually beneficial result for both the government and private sector.

The Malaysian Employers Federation (MEF) proposed measures that would help Malaysians cope with rising living costs, such as:

― Encouraging them to save more for retirement through EPF by removing the current RM6,000 tax relief limit for both EPF contributions and life insurance premiums

― Full tax relief for retrenched workers’ compensation and full tax exemption of the same amount given by companies

Also on MEF’s wishlist:

― Encourage more women, disabled, elderly to be part of labour force with training, flexible work arrangements and proper implementation of part-time work regulations

― Tax breaks for employers hiring retirees; full tax relief for those still working after turning 60

― Don’t use a standard minimum wage nationwide, but base it on a state’s or region’s productivity and economic levels, as well as industry sector

― Rebrand jobs unattractive to locals to make it more attractive, especially to youths

― Levy on foreign workers should be paid by them as a form of income tax for use of public utilities, and to be pumped back into industry to develop skilled local workers.

This levy should not be pushed to employers to pay, and should not be used as a way to increase government revenue or cut Malaysia’s dependency on foreign workers.

― Centralised body to disperse research and design (R&D) grants. And to have industry-specific R&D incubators as done in countries like Taiwan, Japan

― Help SMEs with easier access to loans on more attractive terms such as microfinancing; providing tax breaks and grants to encourage training, automation and mechanisation of production process

― Human Resources Development Fund (HRDF) to support policy for skilled workforce by providing matching grants for skills development

― Centralised agency to manage Technical and Vocational Education and Training (TVET); abolish Skills Development Fund (TPK) and have TVET funding managed by the National Higher Education Fund Corporation (PTPTN) without quota.