KUALA LUMPUR: The government has always taken a cautious approach to reforming the national tax system, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said that although there is a need to grow the country’s revenue, the government needs to balance that desire by taking into account the need to protect the people from excessive burdens.
“Tax reforms through Budget 2024 support the MADANI government’s efforts to strengthen the fiscal base and bring the country’s economy to a better track.
“An example of tax reform is the increase in the service tax rate from six per cent to eight per cent effective from March 1, 2024, which focuses on activities related to discretionary services and activities between businesses (business-to-business/B2B),” Amir Hamzah said during a question and answer session at the Dewan Negara today.
He said the increase in service tax does not involve services that are a basic need and part of the people’s lifestyle.
“This is to ensure that the people are not burdened with higher consumption tax rates, especially in essential services such as food and beverages, parking, telecommunications and logistics.
“The government expects that this change will not cause a sudden increase in the price of services and will not bring a shock to the economy,” Amir Hamzah said.
In addition, he said the government had also enacted the Public Finance and Fiscal Responsibility Act 2023, which came into effect on Jan 1, 2024, so that the government could deal with its fiscal governance issues.
“The government will remain committed to fiscal consolidation in the medium term and special focus will be given to ensure fiscal sustainability through sustainable revenue generation and expenditure effectiveness through increased efficiency, reducing leakage and waste,” Amir Hamzah said.
He also said that Malaysia practices an anti-cyclical economic policy in which the Ministry of Finance regulates fiscal policy through the Treasury and monetary policy through Bank Negara Malaysia so that both policies would ensure the level of national economic growth remains stable.
Amir Hamzah said these are implemented through intervention policies to hinder the economic cycle from growing too slowly or too fast.
“At the same time, the Ministry of Finance needs to ensure that there are sufficient funds so that the federal government can fulfil its role of providing quality and timely services to the people, especially from the aspects of education, health, safety and welfare.
“Therefore, the cost of providing these services needs to be balanced with the imposition of taxes that are reasonable and match the level of service required by the people,” he said in response to Senator Datuk Dr Arman Azha Abu Hanifah who asked about the Finance Ministry’s intervention measures regarding the tax reforms imposed on the people. - Bernama
