Hot on the heels of the highly generous 12-year tax-free status for Lynas Corporation comes another huge ‘GIFT’ – this time for the oil and gas big boys.
While the government seems intent on cutting subsidies on selected essential goods used by ordinary Malaysians, it is dishing out more corporate subsidies, oops, I mean ‘incentives’, to a small band of lucky firms in the lucrative oil and gas sector.
There is a 100 percent 10-year ‘Investment Tax Allowance’ for firms involved in petroleum refining.
The Edge notes that among the US$20bn oil and gas projects in 2012 are the Rapid project in Pengerang, the oil and gas terminals in Johor and Sabah, and the regasification plant in Malacca.
Apart from this, LNG trading companies will enjoy a three-year 100 percent income tax exemption under an appropriately named GIFT (Global Incentive For Trading) programme. What is the justification for this ‘gift’ of a 100 percent income tax exemption? And then we wonder why there is a fiscal deficit!
While the government dishes out generous tax exemptions to the corporate sector, it is now mulling a Goods and Services Tax that will hit many ordinary Malaysians, especially low- and middle-income workers who are currently exempted from income tax. But of course the GST will only come AFTER the general election (if the BN wins, that is). Meanwhile, enjoy the RM500 and RM250 cash handouts (vote buying?) while it lasts.
It is policies such as these that have contributed to the widening gap between the rich and poor.
In fact, corporate subsidies are never referred to as such. Instead many euphemisms are used: soft loans, income tax allowance, pioneer status, tax relief, tax exemption etc – even though these are all obviously subsidies. So whenever there is any discussion about removing subsidies, all these generous subsidies to the corporate sector are never mentioned.