The government says it is aware of the volatile job market despite the higher projection of income tax revenue for 2021.
In his winding-up speech for the Finance Bill 2020 in the Dewan Rakyat today, Deputy Finance Minister II Mohd Shahar Abdullah said the government projects a 1.8% increase in employment rate next year and a decline in unemployment from 4.2% to 3.5%.
He said the matter had been taken into account in determining the new tax range of 30% for income tax.
“Income tax is collected from those who have jobs,” he said.
During the debate earlier, Wong Chen (PH-Subang) had questioned the projected income tax revenue which exceeds the total revenue collected in 2019 at a time when the country is battling the Covid-19 pandemic.
But Shahar said the government’s projection takes into account the performance for each quarter throughout the year.
He said gross domestic product contracted by 17.1% during the second quarter before increasing albeit slowly to 2.7%.
“We cannot only look at internal and external demand,” he said. “It also depends on the perception that stakeholders are politicising the economy.”
Adding that the matter hinges on current economic indicators, he said Bank Negara Malaysia had reported that the country must take into consideration the perspective of local as well as international ratings agencies.
“Local agencies are more in touch with what is going on in our country,” he said.