KUALA LUMPUR: MALAYSIANS should not expect tax cuts or relief in the 2019 Budget as the government cannot afford them. Instead, look for new and higher taxes on the well-to-do, said an economist.
Asian Strategy and Leadership Institute (Asli) Centre of Public Policy Studies chairman Tan Sri Ramon Navaratnam said the Pakatan Harapan government must not tax the low- and middle-income groups, but rather, provide them with incentives.
This, he said, would encourage them to be more productive and to save for rainy days, he said, adding that the people should not expect the usual goodies in the budget.
“We may have to brace ourselves for more tax hikes and we will have to face the prospect of expenditure cutbacks,” he told NST Business recently.
Navaratnam said the government should provide more incentives to corporate foundations so that they could undertake more investments in corporate social responsibility programmes.
“Encourage the private sector to establish more tax-exempt foundations to participate in the education, health, environment protection and tourism sectors.”
He said more attractive policies would encourage the private sector to be active participants in economic growth and income distribution.
On possible revenue sources, he said the 2019 Budget could raise more taxes via wealth taxes, estate duties, carbon taxes and sin taxes like tobacco and alcohol.
“We could increase tax charges on public services, like road and motor taxes, to reduce pollution and traffic congestion,” Navaratnam said.
To improve governance, he said the government must have greater integrity, better public services for the B40 income group, while improving efficiency and fairness in public spending.
“Budget expenditures (in the past) were badly eroded by corruption, leakages, wastage and inefficiencies. The true value for our rising expenditure, expanding debt and our high infrastructure investments were not realised.”
He said the 2019 Budget had to be consolidated and mildly expansionary, while focused on providing the basic needs of the B40 and M40 groups.
Recruitment of civil servants, meanwhile, should be reduced, while those presently employed made more productive.
“The government could also restructure and reform the civil service, which has not been reviewed for ages,” he said.
“We inherited a system that worked well for many years. It then got outdated and corrupted in its leadership and management, and has declined in competitive quality, despite its increase in quantity.”