OCTOBER 10 — Each year, the Malaysian government faces the challenging task of crafting a budget that not only meets the needs of the people but also addresses economic sustainability. In the upcoming Budget 2024, there are several key points that deserve attention. This article explores these points, emphasising the importance of a holistic approach to taxation, economic growth, and economic responsibility.

1. Economy Responsibility and Leakages

Before considering the introduction of new taxes, it is crucial for the government to adopt a responsible approach. Much like a household, the government must carefully examine its revenues and expenditures. The biggest concern is addressing the significant revenue leakages that often go unnoticed. To ensure that everyone who earns any form of revenue pays their fair share of taxes, it is important to plug these leakages.

2. The Controversy of GST

One of the most controversial topics in taxation is the Goods and Services Tax (GST). While GST is often perceived as an aggressive tax, it is also one of the fairest tax systems. It applies to a wide range of taxable goods and services. The key to its success lies in effective enforcement, preventing abuse by businesses and the system.

3. Standardising GST Rates

To streamline the GST system, it is proposed to standardise the rate at 3% for all supplies of goods and services. Additionally, providing rebate vouchers to the B40 and M40 groups on essential goods can help reduce their tax burden. Exemptions should only apply to education, medical services, transportation, and banking services. Such measures would enhance tax collection and deter tax evasion.

4. Graduated GST Rates

GST rates can be adjusted based on the type of goods and services, starting at 3% and potentially reaching 6% for non-essential items consumed primarily for branding purposes.

5. Personal Tax Reduction

The introduction of GST should be coupled with further reductions in personal tax rates. This would leave taxpayers with more disposable income, stimulating economic growth and creating an economy of scale.

6. Exempting Lower Incomes

To promote domestic spending, it is suggested that personal income up to RM 8,000 be exempt from taxes. This measure would indirectly stimulate economic growth and, in turn, generate tax revenue from businesses benefiting from increased consumer spending.

7. Encouraging Youth Employment

To combat unemployment among fresh graduates, it is proposed to provide double deductions for employers who hire these individuals who are unemployed for the first two years after graduating. This initiative would not only support young talent but also reduce unemployment in Malaysia

8. Supporting Local Businesses

Basic necessity goods produced by local businesses should receive special tax deductions. Increasing the chargeable income for Micro, Small & Medium Enterprise (MsME) with share capital of less than RM 2.5 million, from RM 600,000 to RM 1 million, would help businesses to offer competitive prices and foster tax savings.

9. Attracting Foreign Investment

To make Malaysia a preferred place for business, it is essential to streamline approval processes with various government agencies such as including Immigration and the Ministry of Human Resources’ Labour Department by offering tax incentives, and target Fortune 500 companies to establish their Asian headquarters in Malaysia. This move could significantly boost job opportunities and economic growth.

10. Collaboration with Tax Agents

Collaboration between the Inland Revenue Board (IRB) and tax agents is crucial to ensure good governance and accurate tax payment by all taxpayers. This partnership can enhance tax compliance and reduce the risk of tax evasion.

11. Improving Tax Agent Provisions

Consideration should be given to amending Section 153(3) to allow tax agents to represent their clients at the high court if they have lost at the special commission. This adjustment could reduce costs for taxpayers involved in high court cases.

The Budget 2024 points outlined here reflect a comprehensive approach to our economy sustainability, economic growth, and fairness in taxation. By addressing revenue leakages, optimising GST, reducing personal taxes, and offering employment incentives as well as local business support, Malaysia can pave the way for a brighter economic future. Combined with the efforts to attract foreign investment and ensure good governance, these proposals hold the potential to bring prosperity to the nation.

*This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.