FridayOL

PETALING JAYA: Malaysia's projected RM10 billion annual revenue boost from the expanded Sales and Service Tax (SST) is at risk if the government doesn't urgently address inefficiencies and leakages within its departments and agencies. Experts are calling for a comprehensive review and overhaul of processes to ensure every ringgit is accounted for and contributes to national growth.

The expanded SST, aimed at broadening the tax base and increasing government revenue, presents a significant opportunity for Malaysia. However, past experiences have highlighted persistent issues with tax administration, including under-declaration of income, non-compliance, and internal inefficiencies. These factors can significantly erode the potential benefits of the SST expansion.

Addressing the Root Causes of Leakages

Analysts suggest that the government needs to move beyond simply increasing tax rates and instead focus on tackling the underlying causes of revenue leakages. This includes:

• Strengthening Enforcement: Enhanced monitoring and auditing of businesses, particularly those in high-risk sectors, are crucial. This requires investing in skilled auditors and providing them with the necessary resources.
• Improving Data Analytics: Leveraging data analytics can help identify patterns of non-compliance and target enforcement efforts more effectively. Predictive models can flag businesses likely to under-declare income.
• Simplifying Tax Procedures: Complex tax regulations often create opportunities for avoidance. Streamlining procedures and reducing bureaucratic hurdles can encourage compliance and reduce the incentive for non-compliance.
• Combating Corruption: Internal corruption within government agencies can contribute to revenue loss. Implementing robust anti-corruption measures and promoting transparency are essential.
• Digitalization of Tax Administration: Moving towards a fully digital tax administration system can improve efficiency, reduce manual errors, and enhance transparency. Online portals for tax filing and payment can also improve convenience for taxpayers.

Efficiency Gains are Equally Important

Beyond addressing leakages, improving the efficiency of government departments involved in SST collection is paramount. This means streamlining internal processes, reducing administrative overhead, and ensuring that resources are allocated effectively. Training and development programs for tax officers can enhance their skills and improve their performance.

The Economic Implications

Realizing the full potential of the expanded SST requires a concerted effort from all stakeholders. A significant portion of the additional revenue should be allocated to crucial areas such as infrastructure development, education, and healthcare. This will not only stimulate economic growth but also improve the quality of life for all Malaysians.

Call to Action

The government must prioritize addressing these challenges to ensure that the RM10 billion revenue boost is not squandered. A proactive and comprehensive approach to tackling leakages and enhancing efficiency is essential for maximizing the benefits of the expanded SST and building a stronger, more prosperous Malaysia. Transparency and accountability in tax administration are key to maintaining public trust and ensuring long-term economic stability.