Govt should increase RPGT to 25 percent in budget 2014, says Economist

by **Cals** Thu 24 Oct 2013, 13:22

Business & Markets 2013

Written by Bernama

Thursday, 24 October 2013 11:46

KUALA LUMPUR (Oct 24): The government should increase the real property gains tax (RPGT) to 25 per cent for property held under five years and 10 per cent for those under ten years in the Budget 2014.
A visiting lecturer of the Asia-Europe Institute, University Malaya, Dr Jorah Ramlan said the RGPT increase could be one way for the country to increase revenue.
"There is serious concern regarding the staggering prices of real estate in the country in recent years.
"Increasing the RGPT will not affect the construction sector, since there will always be a need for housing development in a growing population.
"Speculation activity in residential property has benefited many capitalists at the expense of the middle-income, low-income and the urban-poor population," she told Bernama.
She said the activity was not economically sustainable and eventually the bubble would burst.
Jorah also said the lack of economic fundamentals to support the rapid increase in property prices would have a negative impact on the financial sector and on house buyers in an economic crisis, regardless OF whether it was triggered by domestic or external factors.
" The financial sector was protected from the last economic crisis due to limited international exposure. However, it may not be so fortunate in an economic crisis where house buyers are affected," she added.
Commenting on the transportation sector, Jorah said the government should also increase the road tax for vehicles with an engine capacity of above 2000 cc.
"As we know, new vehicle registrations increased to 552,200 in 2012, compared to 535,100 in 2011.
" This budget measure will not be a bane for the automobile industry, since vehicles under 2000 cc, currently outnumber those above this capacity," she added.
The Budget 2014 will be tabled by Prime Minister and Finance Minister Datuk Seri Najib Tun Razak in Parliament tomorrow.