The government must spell out clear plans to fund the various initiatives outlined in the 12th Malaysian plan to inspire the confidence of both domestic and foreign investors, a tax expert told Business Today.
Non-Executive Chairman of Triacor Malaysia Dr Veerinderjeet Singh says that the absence of a clear roadmap baffles many stakeholders as to how it plans to move the economy from the recovery stage to the post-recovery stage. Concrete plans of increasing productivity must be laid out to match the shortfall in government revenue presently.
“While the government has said that it would increase the deficit but the shortfall in revenues would be much higher and it needs to coherently articulate how it proposes to finance the expenditure,” he says.
Dr Veerinderjeet who is also the president of the Malaysian Institute of Certified Public Accountants says that government must also start looking for new sources of revenues and at the same time consolidate its expenditures to ensure that there are no wastages and pilfering and that s expenditures are capped.
“A lot of wastages can be avoided and increased efficiency and prudence would help cap government expenditures to meet the current shortfall, “he says.
Prime Minister Ismail Sabri had unveiled the 12th Malaysia plan (2021-2025) last Monday where he announced a of RM400 billion to be spent in the next 5 years, 54% more than the RM260 billion allocated under the 11th Malaysian plan (2016-2020)
On the present tax structures, he says that it was unlikely that the government would raise income tax and corporate tax in the oncoming 2022 budget as most people and corporates are stretched financially and any additional tax imposed would only exacerbate their financial woes.
Veerinderjeet adds that although the present SST had led to a shortfall of revenues as the SST could only rake about RM20 billion as compared to Rm44 billion from the GST, what is not often expressed was that GST covered a wide spectrum of goods of about 70% compared to the SST which only covered about 38%.
The tax expert argue that it was time to look at the SST and ensure that the SST covered the wider scope of goods. “In addition also ensure that SST imposed on the value-chain from the wholesalers to the retailers to do not spike up the prices and become inflationary,” Veerinderjeet says.