30.8 C
Kuala Lumpur
Tuesday, August 16, 2022
HomeNewsMalaysia Govt is considering to bring back GST to improve the Fiscal...

Malaysia Govt is considering to bring back GST to improve the Fiscal Imbalance in Malaysia

The Economic Cooperation and Development (OECD) had urged the Malaysian government to consider re-introducing the Goods and Services Tax (GST) as part of its medium-term fiscal strategy.

OECD’s 3rd economic survey suggests that the Malaysian government needs to strengthen its tax compliance and efficiency of tax collection, and at the same time, securing the transparency of its enforcement

Commenting to the matter, Minister in the Prime Minister’s Department (Economy), Datuk Seri Mustapa Mohamed said that the GST is something the policymakers should consider when the time is right.

In addition, the OECD’s economic survey has made a number of recommendations to the Malaysians government to revive the economy and put it back on track after being suffering from the Covid-19 pandemic.

“Among them is to prepare a post-COVID-19 medium-term fiscal strategy to reduce public debt and contingent liabilities. Our fiscal situation has indeed been strained since last year by the economic contraction, a steep decline in revenues, and increased expenditure for healthcare and income support programmes.” he said.

Meanwhile, Mustapa said that the government will not forget the people and will always put the people’s priority first, especially during these difficult times. However, he said that Malaysia will need to position itself to gradually put the economy back on a sustainable fiscal footing after the health crisis settles down and things normalised.

Among the recommendations given by OECD is to expand the coverage of employment injury insurance for the self-employed to more sectors., which includes workers unregulated markets, such as gig platform workers.

They added that they should be given a pension scheme under Employees Provident Fund (EPF) too.

Another suggestion from OECD is to introduce a carbon tax to gradually reduce the carbon footprint of businesses in Malaysia.

Nonetheless, Mustapha said that it is not the right time to implement the another tax reform but the government will start to look into some reforms to the tax system. The government will be looking into the tax to GDP ratio of Malaysia and to the other countries too.

“We have a narrow revenue base in Malaysia, so tax is important for finance development.” he said.

He added that the issue on tax reforms will be addressed by the Finance Ministry in the 12th Malaysia Plan.

“So there are lots of ideas, GST is one of them and corporate tax is another. The other one is also on improving the tax collection mission. It is not just the rate of taxation, but it is also the ability to collect the taxes.”

“We have seen lots of improvement in terms of tax collection. At appropriate time, some of this proposal will be implemented, but surely now it is not a good time.” he said.

Watch the full press conference here.

Are you supporting for the government to implement GST? Share your thoughts!

Leave a reply

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Recent Comments