Strategic approach needed for sustainable fiscal savings

New Straits Times

9 hours ago

KUALA LUMPUR: The government is currently focusing on identifying tax mechanisms that can be implemented and are compatible with the country's existing economic framework.
Finance Minister II Datuk Seri Amir Hamzah Azizan said any move to introduce new taxes must ensure that the revenue collected is sufficient, justified, and beneficial to the people.
"The government is only considering tax options that can be implemented and are suited to our economic system.
"If we look at measures such as the luxury tax and capital gains tax, these represent major policy shifts," he said on the Keluar Sekejap podcast hosted by Shahril Hamdan and Khairy Jamaluddin.
"What we need to assess is whether the revenue collected from such taxes is adequate to meet our needs and whether it's worth the effort. That's the balancing act we are managing.
"The key is that when we move forward, we do so prudently, minimise the impact, and evaluate the outcomes," he added.
On RON95 fuel subsidies, Amir confirmed that a targeted subsidy mechanism is scheduled to be implemented before the end of the year, with the Cabinet still finalising the income threshold for eligibility.
He said the government is working to determine a fair cut-off point to ensure that subsidies reach those who genuinely need them.
"If we are going to define who qualifies, the challenge lies in deciding where to draw that line.
"Any new mechanism must not be more burdensome than the current system and should be designed to minimise leakages.
"Otherwise, people will find ways to bypass it. We believe using the MyKad is currently the most viable option. I believe most Malaysians are honest and will do the right thing," he said.
As for the government's fiscal goals related to subsidies, Amir stressed that decisions should not be based solely on arbitrary savings targets.
"We can't just say we want to save RM5 billion or RM3 billion and then make cuts arbitrarily. That's not a compassionate approach," he said.
Instead, he said the government needs a sustainable model, similar to the targeted diesel subsidy, to ensure aid reaches the intended groups while protecting them from future price shocks.