Image credit: New Straits Times
KUALA LUMPUR: Malaysia is considering imposing new taxes to boost its revenue, a government official said.
Finance Ministry deputy secretary-general (policy) Zakiah Jaafar said the government would, however, wait for the Covid-ravaged economy to fully stabilise before implementing such measure.
"We are currently embarking on a study to review our tax packages in view to further consolidate and make them more targeted and strategic in nature.
"But rest assured, we are mindful of the impact and the timing. If anything, the government would wait until the economy has fully stabilised and activities are normalised before any major change takes place," she said during a panellist discussion after the launch of the World Bank's "Aiming High: Navigating the Next Stage of Malaysia's Development" report here today.
Over the medium-term revenue strategy, Zakiah said the government was seeking to improve its tax framework, reduce leakages and broaden revenue base while reducing its dependency on commodities.
"One of the initiatives will include tapping into the informal sector, curtailing under the reporting and declaring policies, reducing tax leakage and enhancing tax administration through more effective data management and integration with relevant agencies," she said.
She said the reinstatement of the Goods and Services Tax (GST) could be part of the government's bigger exercise to widen its revenue base.
"We were about to embark on some major fiscal reforms to strengthen the country's revenue capacity when the pandemic broke out and the ensuing crisis.
"During the crisis, extra fiscal space was created by establishing the Covid-19 Fund and the temporary measures for government financing act, which allows for larger expenditure through borrowings in a limited period," she said.
Zakiah said the government had additional flexibility to borrow if further support was needed for the economy in case of lack of revenue.
"However, going forward, we recognise that fiscal space used in the pandemic will need to be rebuilt.
"We are guided by our medium-term fiscal plan and several reforms initiatives which include the establishment of a medium-term revenue strategy and the formulation of the fiscal responsibility act," she said.
Nevertheless, she said the 2021 Budget attempted some revenue expansion despite the ongoing crisis.
"Malaysia has the dubious honour of being the centre of illegal cigarettes market, accounting for more than half of the global sales.
"On some account, our revenue loss due to this illegal trade is estimated to be as high as RM5 billion. The budget introduced a few administrative and tax measures to plug this leakage and restrain the black market," she added.
Source: https://www.nst.com.my/business/2021/03/674334/malaysia-considers-new-taxes-boost-coffers