SHAH ALAM - The government should explore alternatives beyond tax increases and subsidy targeting to boost revenue and manage the nation effectively.
Universiti Sains Malaysia Islamic Development Management Studies (ISDEV) senior lecturer Associate Professor Dr Mohd Syakir Mohd Rosdi proposed three critical measures for improvement: equitable wealth redistribution, addressing tax evasion by the ultra-wealthy, and creating more job opportunities.
According to Islamic economics, wealth redistribution could be achieved through mechanisms such as zakat (almsgiving), waqf (endowments), hibah (gifts), donations, wills, and inheritance.
"The government should focus on these wealth redistribution mechanisms to ensure an effective distribution of resources,” he said.
Syakir suggested that without a National Database (PADU), the government could still identify beneficiaries through existing agencies and enhance zakat distribution incentives without needing a complete system overhaul.
He stated that the government could strengthen the current systems within zakat departments, improve data management, and expand support to other eligible groups beyond the poor.
"For instance, groups like asnaf al-gharimin (those in debt), particularly among the B40 and M40 income brackets, and even some in the T20 group, may require assistance. With 85 per cent of the B40 and M40 groups eligible, zakat can play a critical role," he added.
Syakir highlighted a second crucial step: addressing tax evasion among the ultra-wealthy.
"Taxes are imposed on the M40 and T20 groups due to payroll records, which places a burden on the public, while those earning hundreds of thousands are unaffected.
"As of March, Prime Minister Datuk Seri Anwar Ibrahim reported that only 29 per cent, or 435,000 of the 1.5 million registered companies, paid taxes. Where is the government revenue from the remaining 71 per cent?" he questioned.
He also added that increasing job opportunities presents challenges due to capitalist exploitation, which can economically trap workers, making it difficult for them to escape their burdens.
"Public sector employment should be strengthened to balance private sector jobs, especially in the face of capitalist-driven pressures," he stated.
Referring to the observations by Briggs, A. (1961), Syakir pointed out that Britain’s welfare state is based on three core elements.
"The first is a guarantee of a minimum standard, such as a minimum wage. The second is social protection against misfortunes. The third is the assurance of high-quality public services," he said.
He further cited Greece as an example of a country implementing significant tax hikes and targeted subsidies due to bankruptcy.
"Greece’s prolonged economic crisis resulted from high national debt and excessive spending.
"Prime Minister George Papandreou responded by raising the Goods and Services Tax (GST), increasing alcohol and tobacco taxes, raising gas prices, and freezing pensions and public sector salary caps," he added.