KUALA LUMPUR: Bolder reforms are inevitable in the medium to long term to improve the government's revenue base.
"A stark reality for Malaysia's finances is the comparatively low revenue base. As a share of GDP, government revenue has been steadily declining; forecasted at about 15.6% in 2024, from 20% in 2014," said RAM Rating Services Bhd in its analysis of the recently tabled 2024 Budget.
The credit rating agency said this compares poorly against the global average of around 24% and the average upper-middle-income economies of about 20%.
"To arrest and reverse this, Malaysia needs to institute bolder tax reforms to broaden its tax base; a consumption tax is by far the most effective remedy.
"Understandably, the government is carefully calibrating its approach to the consumption tax given previous less-optimal experience," the statement added. - BERNAMA