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An unusually busy year-end season

  • What if the government has done its best and still fails to fill the shortfall?

By LIM SUE GOAN
Sin Chew Daily

This year-end season is quite unusual. By right it should be a time for merry-making, to be thankful and for making plans for the coming year.

But some in this country are just working extra hard these days!

The inland revenue board has failed to meet the tax collection target for the year, and is gearing up during the last month of the year by locking in 4,158 individuals and companies as well as 15 local and foreign banks involved in offshore trading in Labuan offshore financial center, in their latest tax recovery operation.

So far RM109 billion of tax money has been collected but this falls short of the RM127 billion target. So they get to work extra hard to get the RM18 billion shortfall filled.

The government has finalized the revenue and expenditure numbers from which the deficit is computed. If the IRB fails to meet the tax collection target, there will be a shortfall in the government's revenue, meaning this year's deficit will be higher than anticipated.

If the deficit goal is not achieved, the country's international credit rating could be at stake, and the government has pledged to cut budgetary deficits gradually over the years to strike an ultimate equilibrium by 2020.

Customs director-general Subromaniam said last month the government was confident of meeting the RM42 billion GST collection target during the last month of the year.

The authorities have been very firm when it comes to pursuing unpaid taxes. For instance, Country Heights chairman Lee Kim Yew earlier came under IRB's probe under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLA).

So far the IRB has carried out audits on more than 30 large companies and identified the sum of unsettled taxes and fines amounting to RM1.9 billion.

As a matter of fact, the government is basking on improved cash liquidity this year thanks to rising international crude prices that have significantly boosted Petronas' after-tax profit by 63.93% to RM10 billion in third quarter of 2017.

As a consequence, the national oil company has decided to pay additional RM3 billion in dividend to the government to a total of RM16 billion this year.

If revenue has increased, why should the government go so hard after taxpayers? If the government has indeed overspent, then it should cut back on its operating expenditure!

According to news reports, the blue ocean strategy has helped the government save RM2 billion, for example by putting government departments under one roof. Nevertheless, there is no reduction in the number of service counters. In its stead, the government must bear the cost of transferring public servants to UTCs.

IRB is expected to step up its effort to recover tax shortfalls next year, given the increased collection target of RM134.7 billion. Moreover, individual income tax rate will be reduced under Budget 2018, putting the estimated revenue "loss" to RM1.3 billion.

What if the government has done its best and still fails to fill the shortfall?

Despite the impressive 6.2% Q3 GDP growth, the merciless tax recovery operation will impact the listed companies' performance and overall market sentiment.

Another group of people who will be very busy towards the end of the year are those at the RCI secretariat probing Bank Negara's forex losses.

The RCI reported that the central bank incurred up to RM31.5 billion in forex trade losses between 1992 and 1994, and proposed to investigate then prime minister Tun Mahathir, DPM Anwar Ibrahim, finance minister Daim Zainuddin, Bank Negara advisor Nor Mohamed Yakcop and deputy governor Lin See-Yan.

The RCI has been exceptionally efficient this time, starting the hearings on August 21 and finalizing the 524-page report on the last day of the parliament sitting.

The RCI report is poised to make a great topic for Umno delegates to blast Mahathir and Anwar when the party's general assembly kicks off on Tuesday.

In a country where everything can be politicized, Bank Negara's forex losses will definitely make a huge issue for Umno to fight back after 1MDB.

RCI secretary Yusof Ismail has instantly lodged a police report. If Mahathir and Anwar are to be charged in the court, the election pattern could be drastically altered.

The year-end undercurrents in economy and politics will very much extend to the new year, signally greater economic and political pressure ahead of GE14.

 

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