KUALA LUMPUR: Malaysia’s tax system requires reform due to its imbalanced distribution of non-tax revenue, which tends to narrow the tax base, said an economist.
Bank Negara Malaysia’s (BNM) board of directors member, Dr Nungsari Ahmad Radhi said that the country’s taxation system must undergo reform to give greater buoyancy to government revenue and to broaden the tax base.
“The problem with our tax base is that it is not buoyant to show a 1% gross domestic product (GDP) growth yields more than 1% tax revenue,” he said at the BNM-organised Sasana Symposium 2024.
Nungsari emphasised that the current taxation system relied on direct taxes, such as income and corporate taxes and taxpayers will be monitoring government spending.
Nungsari said the dependency on non-tax revenue in the form of dividends from Petroliam Nasional Bhd (Petronas) is not sustainable in the long run.
“We have been taking so much from Petronas, that they are not making enough investments to explore more wells to pay the dividend they have been paying.
“We have to be prepared for the post-carbon, post-(crude) oil scenario where petroleum-based revenues will no longer be there as in the past,” he said.
Nungsari also said that in the longer term, structural issues highlighted in Madani Economic framework would need close attention.
— BERNAMA
