00:00In this post-Belanjawan 2026 discussion, we take a closer look at how the government plans to strengthen revenue through better governance and enforcement rather than introducing new taxes, and whether this approach is sustainable in the long run.
00:14Havinder Singh, Council Member of the Chartered Tax Institute of Malaysia, CTIM, joined us on the line to share his insight on Malaysia's tax reform priorities and how to build a system that is fair, simple and growth-friendly.
00:25I want to say thank you very much, Havinder, for joining me. Definitely, talking about post-Belanjawan 2026, from the tax dimension, the government plans to boost revenue through better governance and enforcement rather than the new taxes.
00:38Is this a sustainable approach in the long term, or what's your thought on this?
00:43Hi, Nina. Thank you so much for inviting me to share my thoughts.
00:48And I think at this juncture, at this stage, you know, we've seen so many new taxes and, you know, the introduction of e-voicing coming in over the last couple of years.
01:01And this new taxes and the implementation of them obviously causes some level or some measure of disruption and disturbances to taxpayers and to the businesses as well.
01:16So at this juncture, it is not obviously a good idea to look at introducing any additional taxes.
01:22What is required is some measure, some sort of stability and some consolidation.
01:27And, you know, the low-hanging fruits, as far as taxation is absent, have already been introduced.
01:34So it's about enforcement, about ensuring that, you know, there's proper fiscal spending as well.
01:43And in terms of, you know, the way going forward, at some point in time, of course, when you talk about increasing of efficiency, administrative efficiency, etc.,
01:56this tends to plateau or tends to sort of flatten after a number of years.
02:01So in the long run, Malaysia will certainly need to broaden its tax base and possibly through some consumption and, you know, environmental taxes,
02:13which may be the way to go forward in future to ensure revenue resilience.
02:18So at this point in time, I think it's, you know, it's an opportune time to look at consolidating,
02:26to look at reaping the benefits of all the, you know, the taxes that have been implemented.
02:32E-invoicing has been rolled out, a lot of backlash has been received by the government in the past.
02:37But I think people are beginning to see the benefits of e-voicing.
02:41So I think the benefits of this should start kicking in, coming in, in terms of higher tax collections in the coming year, starting from 2026.
02:51And also the government continues with targeted subsidies instead of blanket assistance.
02:56How does this align with the broader goal of fairness and efficiency in the fiscal management?
03:00I think that's the whole idea, you know, to basically look at fiscal fairness and efficiency as well.
03:09Certainly by channeling support to low-income households and, you know, productive sectors,
03:15the government can contain spending while improving equity as well.
03:20But, of course, implementation is to be transparent and data-driven to build and to maintain public trust.
03:28And I think over time, Malaysia should also integrate targeted subsidies with a more progressive framework
03:36to balance redistribution and growth.
03:39As it is, the current overall subsidy rationalization is supposed to, you know,
03:46give rise to about $15.5 billion of savings, as mentioned by the Prime Minister during the budget speech as well,
03:53which, you know, is a huge amount of savings that can be used to enhance social welfare,
04:00you know, to increase allocation, to ease the cost of living for the people that really need it,
04:05you know, and investing in better infrastructure that benefits Malaysia.
04:09And, of course, channel the funds to, you know, to RYAD-based, you know, focused initiatives and projects.
04:17And I think going forward, there would be probably the scope of the rationalization that can be done can be quite wide.
04:26And I'm saying it because, you know, invoicing, once fully implemented,
04:31it would basically have the details of all taxpayers.
04:35I mean, above the age of 18, everybody is supposed to have a 10.
04:38So, even if you go to the, and I don't change it, and you know, buy the cooking oil,
04:44which, you know, there's some sort of subsidy there as well,
04:48it can be targeted based on the profile of the taxpayer.
04:53And these details would be there in the invoicing system.
04:56So, I think there is avenue with all the digitalization that has taken place,
05:00invoicing is put in, there's avenue for better, you know, rollout of this subsidy
05:08regionalization programs as well.
05:11And the budget outline allocations for SDR Bantuan cash aid,
05:15civil service support, and adjustment for inflation pressure.
05:19What's your thought on the support?
05:23Well, I think, of course, the continuation of the sumbangan, tunai-rama,
05:27and, you know, cost of living aids, it shows the sensitivity of development
05:31to household struggles.
05:34And, you know, from many low- to middle-income families,
05:38these direct transfers provide some short-term relief
05:41amidst the rising prices and subsidy regionalization.
05:46The support for civil servants, including adjustments and allowances helps to sustain morale
05:53and also at least maintain, if not improve, the purchasing power.
05:58But, you know, having said that, I think such aids should and will only remain
06:03temporarily cushioning tools, right?
06:05They are not substitutes for long-term reforms in wage policies,
06:10productivity, and affordable essentials.
06:11I think one thing that, you know, perhaps could have been added in the budget
06:17would be things like, you know, maybe a comprehensive cost of living roadmap
06:23that is linked to wage growth.
06:25So, while Budget 2026 handles fiscal consolidation well,
06:32I think it lacks a clear long-term plan to align wages with inflation and productivity.
06:39So, some sort of a structured approach, including wage subsidies for key sectors, right?
06:44And then, you know, giving some sort of incentives to employers that are playing their part
06:48in providing fair, you know, fair pay and fair wages to the employees.
06:54This would ensure that Malaysians can keep up with rising costs sustainably,
07:00not just through AIDRA.
07:02And there was also no mention on GSC in this budget, we can see that.
07:08But many experts argue Malaysia needs a broader consumption tax to sustain revenue.
07:13What's your profession of view?
07:14Is it the right time to introduce it?
07:17And under what conditions?
07:20Well, I think the GST question is always there.
07:24And, you know, I would call it a $20 billion question
07:27because I think if I was mistaken, that's the kind of shopfall
07:31that we currently have without the introduction of, without having GST in place.
07:37But, so, it remains the most efficient tool for product-based revenue generation.
07:45And it may be, you know, sensitive for number of reasons,
07:49but a well-designed GST with maybe a lower initial rate
07:53and a strong targeted compensation for low-income groups
07:57could actually balance the fiscal needs of the government
08:00with social fairness as well.
08:02And maybe this is not the opportune time,
08:06maybe it's not the right time,
08:07but it could be something that we looked at
08:10once e-invoicing has been rolled out fully
08:14and maybe there is inflation stability
08:17and, you know, public readiness as well.
08:19And, you know, as far as invoicing is concerned,
08:24I understand and I know that the invoicing system
08:27or the, you know, invoicing itself
08:30was originally designed to also accommodate for GST
08:34if there is a need for that.
08:37But I think if you go back again, you know,
08:41and I have mentioned this a few times
08:42in my other discussions as well,
08:45when the budget was announced last year,
08:48prior to that, there was a statement by the Prime Minister
08:51that GST will probably be put on hold
08:54until the minimum wage levels rise to,
08:57you know, about 4K or 3,500 to 4,000 a week.
09:01But that's going to be a long time down the road,
09:03but maybe there's a need for them to review this
09:07on a continuous basis
09:08and look at public readiness,
09:11look at disseminating information
09:14and knowledge to the public out there,
09:17to the right channels,
09:18that it's perhaps something that is needed
09:23by the country
09:24and it's not, you know,
09:27as bad as it might have been pictured to be.
09:32So maybe it's something
09:34that is surely there in the pipeline,
09:36but it's a question of time.
09:38Okay.
09:39Balance of two minutes,
09:40maybe having to share with us
09:41as Malaysia moves toward a low-carbon economy,
09:44how ready is our tax system
09:45to integrate carbon taxes or green initiative
09:48without burdening industries?
09:53Well, the carbon tax,
09:55moving into carbon tax,
09:56it's a bit of a shift, right,
09:58from the policy perspective.
10:00I've never really had anything
10:01along those lines in the past.
10:02So our tax system
10:06is gradually aligning
10:07with sustainability goals,
10:09but readiness for carbon tax
10:12is really still in its infancy.
10:15Most people don't even know
10:16what it entails.
10:18So at the moment,
10:19you know,
10:19the phased approach
10:20starting with voluntary carbon markets,
10:24emissions reporting,
10:26targeted green incentives
10:27is prudent.
10:28And the fact that
10:30it's being also rolled out
10:31in phases
10:31with iron and steel
10:33energy sectors initially,
10:35I think that's a good move.
10:38So initially,
10:40a modest carbon tax
10:41can be introduced
10:42without shocking industries.
10:44And of course,
10:45coordination between
10:46the fiscal
10:46and environmental agencies
10:48will be quite key as well.
10:51And many export-oriented industries,
10:53if I may just add,
10:54especially energy intensive
10:56and the E&E sectors,
10:58they can be quite price sensitive.
11:01And the carbon tax
11:02may actually erode
11:03global competitiveness
11:04if the peers do not match it
11:07or if there are no
11:09border adjustments.
11:10So there's a lot of work
11:11that needs to be done
11:11to make it work.
11:15To make it also remains fair,
11:17simple,
11:18and also growth-friendly
11:18in the future,
11:19I want to say thank you very much
11:20having this thing
11:21for helping us understand
11:22Fused Belanjungan 2026.
11:24from the text
11:25through from the mentioned.
11:27Hopefully,
11:27we can talk in the future
11:28and definitely
11:29all of our future discussion here
11:31will be uploaded
11:32within astrohony.com
11:33and of course
11:34all over social media platform.
11:36All right.
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