Ngeh: End property gains tax to help spur economy

 

Beruas MP Ngeh Koo Ham has called on the Perikatan Nasional government to suspend or abolish the real property gains tax under the Real Property Gains Tax Act 1976 to help spur the economy.

In doing so, he argued that the Real Property Gains Tax Act 1976, introduced to limit property speculation in order to avoid spiralling prices and a potential property bubble, was not intended to be a revenue-generator.

"Our nation’s economy is currently experiencing an economic recession. It is time to suspend or abolish real property gains tax (RPGT) under the Real Property Gains Tax Act 1976. We have done it twice before to overcome the economic situation then," said Ngeh in a statement today.

Transactions normally subjected to RPGT were exempted for a year in 2003/04 as part of a stimulus package then to revive the economy and the RPGT was again suspended from April 2007 until December 2009 in the wake of the global financial crisis, he said.

"Currently, the disposal of up to three residential properties per individual and the disposal of properties worth less than RM200,000.00 (no limit on the number of units) on the sixth and subsequent years after the acquisition of the property are exempted from RPGT.

"These exemptions are insufficient to fully encourage the sale and purchase of real properties as RPGT is imposed in all other circumstances," claimed Ngeh who has served as Beruas MP since 2008.

"People are reluctant to invest in real properties as RPGT as high as 30 percent is imposed on their gain but they have to bear a 100 percent loss when it occurs. People selling their real properties should have cash for other economic activities which will, in turn, help our nation’s economy," he argued.

Ngeh said that if the RPGT were to be suspended or abolished, many would be willing to use their cash reserves to invest in real properties especially when deposit interests at banks are at a historic low.

Citing data from the National Property Information Centre (NPIC), Ngeh said Malaysia saw the property overhang rising by 10.7 percent and 13.2 percent in volume and value to 63,063 units worth RM47 billion as at the end of the first half of 2020 against 56,988 units valued at RM41.5 billion a year ago.

"Encouraging people with cash reserves to buy more real properties will benefit both buyers and sellers.

"Buyers can now buy at better prices because of the surplus in supply while sellers can reduce their debts and liabilities which often carry high-interest costs.

"A protracted overhang may cause the property value of owners to be further suppressed," he said. - Mkini