Tax reforms a necessity, despite govt facing 'dilemma', says Anwar

The Star

5 hours ago

KUALA LUMPUR: Although the government is faced with a "dilemma", the implementation of tax reforms is a necessity, says Datuk Seri Anwar Ibrahim.
The Prime Minister said such reforms were needed to cater to costs brought about by new, emerging challenges facing the nation.
"I said that it is a dilemma and to paraphrase Hamlet; 'To tax or not to tax'.
"Yet, you have to expand the revenue base to ensure public services, education and healthcare reforms.
"The new challenges such as Artificial (AI) technology and digitisation, all this demands funds and disbursements of more funds.
"But no one wants to pay, including the very rich," he said when launching the Digital Asset Sandbox and Sasana Symposium 2025 here on Tuesday (June 17).
Anwar, who is also Finance Minister, said that the tax reforms were also necessary as it would expand the revenue base to improve enforcement efforts while addressing leakages without burdening the poor.
In a statement on June 9, the Finance Ministry announced that the reviewed and expanded Sales and Service Tax (SST) rates would come into effect this coming July 1.
The measure is aimed at strengthening the country's fiscal position by increasing revenue and broadening the tax base, the ministry said.
The announcement has since received pushback from several quarters, calling for it to be put on hold, saying that its implementation could worsen living costs and place further strain on small businesses amid fragile economic conditions.
On a separate matter, Anwar said that a joint ministerial committee was recently formed to look at reforms in the national healthcare system to ensure affordable and accessible private healthcare for people.
"For many Malaysians, private healthcare is becoming increasingly inaccessible due to escalating medical costs and inflation.
"This is not just an alarming concern but also a question of the national wellbeing," he said.
The committee, comprising representatives from Bank Negara, Finance Ministry and Health Ministry, will look at long-term concrete solutions, he added.
"We are not looking for minor adjustments or minor paradigm shifts.
"We must be prepared to undertake a fundamental shift towards value-based private healthcare systems that prioritise outcomes, transparency and fairness.
'Key reforms include clearer pricing, stronger digital healthcare and expanded access to affordable options such as universal base medical insurance products,' he said.
Anwar gave his assurance that the joint committee would deliver on the reforms unlike attempts by previous committees which were unsuccessful.
He said the government must go beyond symbolic changes to carry out reforms to ensure affordable and accessible private healthcare.
On subsidy rationalisation, Anwar said that it is not a luxury but it is a national necessity albeit unpopular.
"We do not have a choice but yet the problem lies where on one side, you have impatient demands to undertake massive reforms.
"On the other hand, there are the ultras, neoconservatives and desperate politicians who would go against any attempts to undertake reforms," he said.
He said that such a negative narrative was prevalent on social media and more effort must be done to explain the need for the subsidy rationalisation exercise.
"Many of the corporate players are completely oblivious to these things and that is our challenge.
"While it has to be done, it also has to be explained and well articulated to get the people to understand and appreciate," he said.
On Monday, Anwar said that the RON95 petrol subsidy rationalisation would go ahead as planned.