The economic adviser to Prime Minister Datuk Seri Anwar Ibrahim considers the decline in tax revenue in Malaysia's Gross Domestic Product (GDP) figure as 'strange' at a time when economic growth is getting stronger.
Part of the problem can be attributed to tax collection data showing that only 15% of the labor force pays taxes to the Inland Revenue Board (IRB).
According to the Prime Minister's Senior Director of Economics and Finance, Nurhisham Hussein said the government's priority at the moment is to find out why and how tax revenue to GDP is reduced and how to restore it.
In the 2024 Fiscal Outlook report, the Ministry of Finance expects tax revenue to GDP in 2024 to drop slightly to 12.3% compared to 12.4% in 2023.
In his opinion, Nurhisham said GST is not the only solution that can help expand the government's tax revenue base.
It is able to suppress income tax more progressively and review the incentives given so far to the corporate sector.
This is because the revenue from personal income tax is relatively low at 2.4% of GDP compared to the emerging market average of 3%.
Previously, it was reported that the T20 income group in this country contributed 85% or RM33.68 billion of the personal income tax collected in 2022. The M40 category contributed 13% or RM5.38 billion.
