KUALA LUMPUR: The government should consider coming out with measures in Budget 2020 to counteract the downward forces that have been affecting Malaysia, says a prominent economist.
Prof Dr Jomo Kwame Sundaram (pix) said one of the key measures is to make sure the bottom 70% of the Malaysians can spend more.
“Additional income for relatively less well-off translates into spending. You give an additional ringgit to a rich person the rich person is not going to spend the extra money.
“But if you give the additional ringgit to the poorer person, the person is likely to spend that money,” he told a media briefing on the annual Trade and Development Report by the United Nations Conference on Trade and Development (UNCTAD), here today.
Jomo, who is also Khazanah Research Institute research adviser, said having a more effective tax system would make a big difference in boosting the government’s income.
“Right now, due to the debts that the government inherited, there is understandably more debts (created). Given the serious situation in the world today, I think it is important for us to make sure the umbrella is ready before it rains,“ he added.
Jomo said there are many ways to improve corporate taxation rather than just changing tax rates.
“If, for example, a company is allocating additional investments, then you might want to give them a tax break because they are investing and enhance the economic capacity of the country.
“Basically, what you want is smart taxation. You want to have meaningful economic incentives. You want to reward entrepreneurship,“ he added. - Bernama
