Govt needs to look for tax revenues from new sources, say economists

SHAH ALAM - Government needs to find tax revenues from new sources to fund future expenditure, says an economist.

Universiti Malaya Associate Professor Izlin Ismail said Malaysians do not favour goods and services tax (GST) as it is seen as a regressive tax as people end up paying for more.

Izlin further said the government needs to ensure economic growth before looking at changing or increasing taxes.

"If they reintroduce GST, the infrastructure is there so it can be rolled out fast. They just need to fix those problematic issues faced earlier such as delays in claims.

"GST is a regressive tax and government has to find tax revenues from new sources to fund future expenditure," she said to Sinar Daily.

In this case, Izlin encouraged the government to expand revenue generated from GST on initiatives or policies that benefit the poor which will eventually improve their cost of living.

She suggested for an increase in corporate tax or introducing capital gains tax on investment.

"However, this will be temporary. A more sustainable approach to helping the poor is to improve their job prospects or opportunities to run a business," she said.

Meanwhile, Universiti Tun Abdul Razak (Unirazak) Economist Professor Barjoyai Bardai said sales and service tax (SST) should be a short-term policy.

"SST is fine, the productivity is less than GST and that is because the tax rate is low. If we want high tax revenue just increase it a little.

"As long as we can remove the cascading effect, and remove the burden to the public, iw will not be seen as a problem," he said.

"In this way, the customer won't complain and we will have cascading effect," he reasoned.