ALOR STAR: The government must reassess its fiscal deficit target of three per cent before reviewing the implementation of the Sales and Service Tax (SST) two per cent rate increase.
Universiti Utara Malaysia economic expert Associate Professor Dr Irwan Shah Zainal Abidin said it was crucial that the government addressed the matter before discussing the feasibility of postponing the SST rate hike.
"I don't see the logic why the deficit level needs to be reduce now. The three per cent deficit target seems arbitrary. I don't think that the economy will collapse if the deficit level reaches six per cent.
"Rating agencies will look at other economic indicators to assess the economy and not merely looking at the deficit level.
"This is the core issue that needs to be addressed first," he said when contacted today.
Irwan said this in response to a suggestion made by former finance minister Lim Guan Eng to reconsider the tax hike and the implementation of the high-value goods tax.
Yesterday, Lim reportedly proposed that the government delay the implementation of these tax measures, which can burden the public, until the economy improved.
Lim suggested establishing a national reform congress to demonstrate the government's commitment to economic and political reforms.
Irwan argued against establishing a national reform congress, insisting that it would only increase bureaucratic layers in the country.
"The government already has the secretariat to the Advisory Committee to the Finance Minister (ACFIN), a few economic advisors, and even a 'point man' on matters of economic policy.
"There is no need to add more bureaucracy in this regard.
Even the second finance minister has already been appointed."
On the depreciating ringgit, Irwan said currency performance should not be the sole indicator of the economy's health.
"As for the ringgit, more needs to be done. But the local note's performance is not the sole measurement of the current health of the economy.
"The more serious issue which requires attention is the lacklustre performance of the economic growth in 2023," he added.