The Malaysian Institute of Taxation (MIT) is suggesting the government to consider imposing a cut in employee’s EPF deduction rate.
The suggestion, which was made by its president, Dr. Veerinderjeet Singh, comes at a time where majority of the citizens are embracing difficult times financially. The recent increase in petrol price and household goods has created a lot of anguish and resentment among the public.
Through the deduction cut, employees will be able to make use of more disposable income to cater their current needs.
The body hopes such proposal can be presented during the Malaysian Budget 2009, which will be tabled in the parliament, by the Prime Minister cum Finance Minister Dato’ Seri Abdullah within the next few weeks.
MIT also proposes for to include ceiling for tax rebates on insurance, as well as widening the tax bracket or band. It compares the income tax system in Singapore, which has a broader tax bracket. This naturally means that an increase in income for an employee may not push him into the next tax bracket, which equals to paying higher income tax.
At the moment, the rate of EPF deduction for employee is 11% of their monthly salary. The employer, on the other hand, contributes 12% to their EPF account.