Taylor's budget wishlist: Tax rebates, reviving domestic tourism, expedite digitalisation

KUALA LUMPUR: Budget 2021, which will be tabled this Friday, needs to take into consideration expanding the employment insurance scheme (EIS) for gig economy participants, tax reductions, empowering local tourism, as well as tax cuts to support digitalisation initiatives.

Taylor’s University, School of Management and Marketing, associate professor Dr Hafezali Iqbal Hussain said the current EIS under the Social Security Organisation (Socso) should be expanded on a voluntary basis to those who are self-employed, which would also cater for those in the gig economy.

"Socso could propose options for those who wish to take up enhanced versions of the scheme whereby the unemployment allowance can be up to 100 per cent of wages for six months rather than the declining approach currently adopted.

"In addition, the cap for contribution should be increased to RM8,000 (from the current cap of RM4,000) given that the poverty line has also been revised from RM908 to RM2,208 in July 2020," he said in his budget wishlist opinion piece yesterday.

He added that contributions for the EIS including voluntary uptake should be given tax deductions.

The enhanced EIS framework would serve the country well in future crisis as well given the evidence emerging out of countries such as Germany which indicated that lessons learnt from the 2008/9 financial crisis has led to an enhanced adoption of such schemes which were heavily relied on during the peak of the job losses due to the current recession, he stressed.

Hafezali said the government should also consider providing matching grants in the form of Employees' Provident Fund (EPF) contributions for those who do not meet the basic savings requirement from the B40 and those in the 45 to 55 age bracket.

"This is to cater for an ageing society as well as the reliance on EPF withdrawals during times of hardship over the years.

"The tax deduction should also be increased to RM6,000 for EPF contributions while maintaining a separate RM3,000 for life insurance or family takaful contributions," he said.

The tax deduction for the National Education Savings Scheme (SSPN) should be increased to RM10,000 in order to allow parents to get back on track to accumulate savings for education to counter potential depletion of savings during the pandemic.

"In addition, the quantum for tax deduction for education fees at the post-graduate level should be increased to RM15,000 in order to encourage upskilling of the current workforce in order to reap the benefits of the economic recovery while ensuring resilience during future downturns. The deductibility should also be extended to include fees for spouses," he said.

To further promote domestic tourism post-COVID-19, he said that the wish list included an extension of the domestic tourism expenses until end-2021.

"This allows the sector to rejuvenate and partake in the expected economic rebound, thus providing a much-needed boost in spending in the sector which has suffered in the current situation. We also hope for a special tax deduction of RM5,000 at the individual level in order to boost consumption spending in 2021."

In supporting the digitalisation initiatives, the government should consider an extension of lifestyle tax deduction into 2021, which is RM2,500 for purchase of devices such as smartphones, notebooks and tablets which was introduced effective June 1 for 2020.

"This would allow more Malaysians to utilise the tax break, given that current projections point towards a strong recovery in 2021."

Hafezali added that the lifestyle deduction should be enriched to include other items which cater for the conversion of the home to learning and working space such as specialised desks and office chairs.

"Bills for mobile postpaid lines should be included in the lifestyle expenses in addition to the current Internet bills to cater for the study and work from home culture," he said.

-- BERNAMA