An economic adviser to Prime Minister Datuk Seri Anwar Ibrahim has called Malaysia’s declining tax revenue-to-gross domestic product (GDP) as "strange”, considering the fairly strong economic growth enjoyed by the country.
Another cause of concern is low contribution from Malaysia’s consumption tax such as the sales and service tax.“Only 2.8% of GDP is actually from consumption tax, which is definitely the lowest among Asean peers.“The Goods and Services Tax (GST) is one way to improve the consumption tax revenue,” according to Runchana.
Runchana Pongsaparn, principal economist of the Asean+3 Macroeconomic Research Office, said that Malaysia’s tax revenue-to-GDP is lower than most countries in the region.“What makes it worse is that the ratio is declining, down from 14.6% in 2011,” she said, although she noted that China, Vietnam and Thailand are also facing a decline.
