The Business Times

KL's invest plan for tax agency a bad idea

Published Mon, Jun 16, 2014 · 10:00 PM
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A BILL to amend the Inland Revenue Board of Malaysia Act 1995 is a bad idea to begin with. Its passage would allow the finance minister - currently Prime Minister Najib Razak - to set up an investment panel within the Inland Revenue Board (IRB). The passage of the bill would enable the panel to invest taxpayers' funds into equities, initial public offerings, bonds, debt paper, and even property assets. The bill would give the finance minister the power to appoint six of the seven members of the investment panel. The seventh would be the governor of the central bank, currently Zeti Akhtar Aziz.

The function of the IRB is to maximise the collection of tax revenue for the government, pure and simple. It is certainly not to invest taxpayers' funds in potentially risky assets. In any case, the government has already got at least 10 investment funds and sovereign wealth funds including the Employees Provident Fund (RM600 billion in assets), Permodalan Nasional Berhad (RM237 billion) and Khazanah Nasional (RM135 billion). All these funds have been around for a long time and have been generally transparent and fully accountable.

If the government wanted to increase the investment of its funds, it should simply increase its allocation to Khazanah. In any case, how much spare cash does the IRB have lying around anyway? It can't be very much given that the government expects to run a budget deficit of 3 per cent of gross domestic product this year.

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