Putrajaya may need to devise new taxes in order to pay off the country’s huge debts, according to Prime Minister Dr Mahathir Mohamad.
He said there had been suggestions for the imposition of new taxes although he was aware that this could be an unpopular move.
“I don’t think it is something welcomed by the people. But we may need to devise new taxes in order to pay our debts,” he said in his keynote address at the “Malaysia: A New Dawn” conference, which was also attended by other Pakatan Harapan (PH) ministers.
It was previously reported that Nobel Prize-winning economist Joseph Stiglitz had suggested that there were many kinds of good taxes that could be introduced to stimulate Malaysia’s economy to create a fair society as it tackles its RM1 trillion debt.
Stiglitz said these included inheritance tax, capital gains tax and property tax for large holding properties, which were actually good for the economy and society.
“Also, I think carbon tax is a very good tax because it encourages the growth of green economy and can move the country towards a more innovative and green society,” he told Bernama.
Mahathir said another way of paying off the nation’s debt was by selling assets such as land. He noted that the previous government had sold a lot of Malaysian land to foreigners.
“I don’t think it would be good for us. But we can still sell land to locals so that they can develop housing and settlements that would give them returns,” he said.
The Langkawi MP said the sale of some of the country’s assets might be necessary to pay off debts, adding that it was not just money, but the government machinery which had been tampered with.
“It no longer functions. We have to find ways to rebuild the government. It won’t be easy because the new people taking up high posts find difficulty in performing.
“I am hopeful we will be able to manage all the problems, and in time we will restore the finances of the country and rebuild the government machinery which was destroyed by the previous government,” he said.
Mahathir said he had faith that the rebuilding process could take place as Malaysians had proven that they could go through many economic problems and yet survive.
He cited the financial crisis of 1997-98, where the country found its own solution and recovered.
“The situation now is almost the same, except that in the last crisis, our money was devalued, and when that happened, we became poor.
“This time, it is not so much the devaluation. Our currency has remained strong, it has gone up and down, but it has remained acceptable as money.
“The problem we face now is finding the money to pay the huge debts incurred by the previous government. We believe we can overcome this,” he said.
Finance Minister Lim Guan Eng, in his address, said the new taxes would be announced in the 2019 Budget, to be tabled at the next parliamentary sitting.
Mahathir said in the meantime, there was a necessity to grow the economy. If the economy grew at a high rate, he said, the debts would appear smaller than they are now.
He said the debt-to-GDP ratio lost would be resolved by increasing or growing the economy of the country.
“For this purpose, we have invited investors. During my recent trip to the UK and US, I met a lot of big companies interested in investing in Malaysia, and I believe in time they will come and their investment will contribute to the growth of Malaysia.
“When the growth of this country is high, debts won’t appear so big in terms of the economy for this country.
“That is our hope. As I said, I am not an economist, but I work with them. They tell me something that is difficult for me to say no to because I don’t know what they are talking about,” he said.
In the same keynote address, the PH chairman also touched on how money was coming in many different forms, citing the bitcoin currency as an example.
Mahathir said countries were used to trading in pieces of paper printed with particular values.
“That used to be our money. Now we have money coming to us in different forms. It comes to us as cheques, as electronic transfers and bank books, among others. Money no longer comes in one form.
“And now, of course, there is this new money which I fail to understand completely. Bitcoin, which is virtual money. It somehow appreciates in value to tens of thousands.
“When it was launched it was only valued at 9 cents and now it is thousands of dollars. I must admit, I can’t use this money because I don’t know what the value is,” he said.
He noted however that virtual currency could affect the markets or countries with which Malaysia trades.