THE government should consider broadening the scope of the Sales and Services Tax (SST) under Budget 2021 in order to de-incentivise the shadow economy.
In a statement today, TA Securities Research said the move should also include allocation for enforcement activities to collect SST as it would prevent leakages and boost public coffers.
“This may not necessarily be attributed to illegal businesses alone but also address the issue of unreported income from legal goods and services,” said its head of research G Kaladher.
He also said that as the COVID-19 pandemic is ravaging public health and the global economy, it is not advisable for the government to unveil any new tax measures.
“Such a measure may irk the public and the business community in view of the challenging times,” said Kaladher.
He added that Malaysia’s fiscal deficit may soar to 5.5% next year, which is likely to be financed by borrowings.
Digitalisation: The way forward
On how to revitalise the economy, Kaladher suggested that the government should further incentivise sectors which inculcates sustainable development, production and consumption.
He said that such a move would help fulfill the needs of the current generation without affecting the future generations.
“The government should provide tax incentives to green initiatives which involves managing natural resources responsibly, while reducing wastage and promote recycling,” said Kaladher.
He added that Malaysia should also invest more on its digitalisation efforts, especially on service delivery, in order to increase competitiveness and provide timely service.
“These efforts will not only help communicate government policies and projects better to the people but also assist businesses to make informed decisions. In the long run, it will lead to better management of government machinery and plug leakages,” said Kaladher.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz is scheduled to present Budget 2021 on Nov 6. – Oct 16, 2020