KUALA LUMPUR: The government may have tweaked a controversial Bill that allows the Minister of Finance (MoF) to set up an investment panel within the Inland Revenue Board (IRB) to invest in stocks, initial public offerings, bonds, debts and property assets, as pressure mounts over why the country needs another sovereign wealth fund like 1Malaysia Development Bhd (1MDB), according to sources.
A source close to the matter told The Edge Financial Daily yesterday that the IRB would not be given the authority to invest taxpayers’ money directly, but only the balance of its annual allocation given by the government after paying staff salaries and expenses in IRB.
This is similar to what had been reported by Guang Ming Daily on Sunday, quoting Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah during a Barisan Nasional event.
Ahmad Husni had said the IRB, after collecting taxpayers’ money, must deposit the money to Kumpulan Wang Disatukan.
“The money belongs to the government and the IRB has no right to use it,” he reportedly said.
According to Husni, the government will allocate a fixed amount to IRB annually where 70% will be used to pay salaries of its 11,000-staff and its expenses.
“If there is any balance, then the IRB can use it to invest,” he had said.
According to the source, the IRB charges the government 1.5% of its tax revenue to pay for operations.
“Now they (the government) say after paying salary and bonuses, there is a balance of a few hundred million ringgit which can be invested by the new investment panel,” he added.
This seems to differ from what the Opposition had claimed last week whereby the IRB could invest taxpayers’ money directly and that the amount involved could be much larger.
The proposed Bill was expected to go for its second reading in Parliament today (June 17), which involves amending the Inland Revenue Board of Malaysia Act 1995 to allow MoF to set up the investment panel within the IRB.
Currently, the IRB is only allowed to invest in “safe investments” like fixed deposits, and mortgage papers and bonds from banks and other financial institutions listed under the Banking and Financial Institutions Act.
The government is also seeking an extra budget of RM4.112 billion this year of which the Treasury General Services requires RM208.95 million to make bonus payments for IRB staff for 2013.
At Parliament yesterday, Kelana Jaya Member of Parliament Wong Chen told reporters that the government should set a limit to the tax revenue that the proposed investment panel can utilise if the proposed Bill is passed.
“A firm commitment by the MoF is needed to assure all taxpayers that a sizeable portion of our hard earned money will not be spent with wide discretionary powers as proposed by the Bill,” he said.
“If the investment range is expanded, would the board be willing to publish all its accounts for review?” he asked.
The IRB had collected RM110 billion in taxes for the financial year ended Dec 31, 2011. Of this total, RM255 million were invested in short term fixed deposits, all of which are with licensed banks, said Wong.
“The balance sheet did not show any long term investments in bonds or stocks, merely short term, very conservative, fixed deposits in banks,” he added.
He noted that investments were a mere 0.23% of the total tax collected for both 2011 and 2010.
“PKR reiterates that the proposed Bill is pushing the IRB into uncharted waters to take on all investments under the sky,” said Wong.
This article first appeared in The Edge Financial Daily, on June 17, 2014.
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