UPDATE 2-Malaysia weighs windfall tax as prices rise

(Recasts, adds details)

By Soo Ai Peng

KUALA LUMPUR, May 21 (Reuters) - Malaysia may impose a windfall tax on industries least affected by inflation to help curb price pressures, a government minister said on Wednesday, as annual inflation climbed to a 15-month high in April.

"One of the proposals that we have considered is to impose excess profit tax or windfall tax," Domestic Trade Minister Shahrir Samad told reporters. "The concept is to make sure that there is a fair distribution from groups whose incomes are not directly affected because of inflation."

The minister declined to name which industries would be affected under the proposal.

"Whoever feels that they have a windfall, they will be taxed. It's part of the anti-inflation approach that we have taken."

Commodity companies are normally seen as inflation-proof as their income grows as prices go up.

Shahrir said such additional tax income would allow the government to maintain its development agenda without making a big cut to its subsidies for basic items, which is key to curbing runaway prices.

"We want to ensure that government revenue will continue growing and its expenditure could still be channelled to subsidies. Also, we need extra income to fund developments," he added.