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KUALA LUMPUR – The government’s decision to not reintroduce the goods and services tax (GST), as announced during the presentation of Budget 2023, will not cause losses to the country, said a Putra Business School (PBS) economic analyst.
Assoc Prof Ahmed Razman Abdul Latiff said this is in view of various alternatives that can increase the national income without burdening the people.
According to him, even if GST is not implemented, additional revenue can be generated through other taxes, such as the introduction of the luxury goods tax and a possible tax on capital gains.
“This matter is implemented to ensure that leakage does not occur so that matters to get over the loss of revenue can be overcome.
“Therefore, GST must not be the only solution, there are many other approaches to increase the country’s revenue,” he said when contacted by Getaran, The Vibes’ Bahasa Malaysia sister portal.
Razman said this in view of Budget 2023 presented by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim on Friday.
With the theme of developing Malaysia Madani, Budget 2023 totalled RM388.1 billion, of which RM289.1 billion was allocated towards operating expenditure and RM99 billion to development spending, and RM2 billion in contingency savings.
It also includes 12 main efforts based on three determinations, which are inclusive and sustainable economic drive, institutional and governance reforms to restore confidence, and social justice to moderate disparities.
Razman described the details of the budget as showing the commitment of the Anwar-led unity government to prioritise the welfare of the people without neglecting economic growth.
He added that the budget created its own history when the prime minister promised to eliminate hardcore poverty, ensuring that there would be no one falling under that category in the country.
Despite the prime minister’s heavier focus on the well-being, welfare, and economic empowerment of the people, Razman praised the government’s efforts to allocate RM99 billion for development expenditure, with it continuing to record an increase, compared to what was offered by the previous administration.
“Development spending for infrastructure construction has a long-term impact in generating economic growth because it involves infrastructure development.
“Even though the country and the world are facing a global economic recession that may slow growth, domestic spending from the government’s point of view will continue,” he said.
Meanwhile, economist Assoc Prof Abu Sofian Yaacob said that Budget 2023 is able to guarantee the welfare of the people and curb the increase in the cost of living faced by vulnerable groups.
According to him, it is a positive step from the government to strengthen the role of government-linked companies (GLCs) and government-linked investment companies as the driving force behind the country’s economy.
He added that the transformation of government agencies not only in physical terms, but also overall in mental and attitude terms, to ensure that the country can function better and efficiently is more important.
“In addition, empowering internet access with discounts for those who use public transport as announced is also very good, but I have not seen the overall effort in helping school students, such as giving help in (paying for) school buses,” said Abu Sofian.
The economist also said that through his (Anwar’s) Budget 2023 speech, the prime minister also openly focused on encouraging foreign investors as well as local investments involving small and medium enterprises (SMEs), such as the use of automation and digitisation.
“We ask that the government continue to advance innovation and technology, it is necessary because it coincides with the time. We don’t want Malaysia to be left behind by foreign countries due to a slowdown in the use of technology.
“Malaysia should move with the times and the current economic situation which requires us to compete with other countries. There is a need to look in detail to fully implement the adoption of Industrial Revolution 4.0 with various improvements.
“We need to export palm fruit or rubber not as raw materials, such as cooking oil or rubber scrub, but as products. For example, if the rubber made into new tires is imported with the use of more advanced technology,” he said.
Commenting further, Abu Sofian supported the government’s move to reduce the resident individual income tax rate for the M40 group by 2%, involving an income range from RM35,000 to RM100,000.
“The government can reduce those things and they can ‘bind’ people who previously may not have paid or individuals who evaded tax.
“But if possible, increase from RM2,500 to RM5,000 income excluded from tax. So, that thing will have a little effect,” he said.
Meanwhile, speaking to The Vibes, the group chief executive of AMMB (AmBank Group) Holdings Bhd, Datuk Sulaiman Mohd Tahir, said the proposed budget would help improve the prospects of the domestic economy, given the higher allocation of RM97 billion for development expenditure.
He added that the fiscal deficit is projected to shrink to 5% of the country’s gross domestic product, which shows the government’s financial efficiency in managing the economy.
“At AmBank, small and medium enterprises (SMEs) are our customer base and we are encouraged by the government to support this important pillar of our economy, especially as a result of the RM10 billion loan fund that will be provided by Bank Negara Malaysia.
“The matter is to ease the financial burden of SMEs as well as the Business Financing Guarantee Company (SJPP), to provide guarantees of up to RM20 billion, in addition to focusing on sectors such as high technology, agriculture, and manufacturing. This will certainly empower local SMEs,” he said.
Sulaiman also praised the prime minister’s call to strengthen Islamic financing which he believed would bode well for Malaysia as a hub of Islamic financing.
“In that regard, AmIslamic hopes to build on this momentum. It is a forward budget aspiration, particularly related to governance and management (ESG) in the form of a loan fund of up to RM2 billion to support sustainable technology for start-up companies.
“It is also to promote SMEs towards adopting low-carbon practices in order to show the government’s significant commitment to ESG.
“We hope that SMEs and GLCs build on this positive trajectory,” he added. – The Vibes, February 26, 2023
