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KUALA LUMPUR: The World Bank has suggested that the government consider a fiscal policy that strives to increase revenue and improve spending efficiency.
In terms of revenue, the government may consider strategies that prioritize increasing the progressivity of the personal income tax framework, he said.
The World Bank said the government could study the possibility of eliminating exemptions from excise taxes on non-essential items; expand the tax on capital gains; explore other forms of progressive taxes, including taxes on wealth; maximize profits from tax expenditures; and improving revenue management.
His suggestions were contained in his latest edition of the World Bank’s “Malaysia Economic Monitor: Sowing the Seeds” which was released on Thursday.
In its report, the World Bank expects Malaysia’s economy to grow 6.7% next year after a projected contraction of 5.8% this year due to the impact of the Covid-19 pandemic.
“As health risks diminish and the economic recovery is underway, the policy focus will need to shift to facilitate the economic adjustments necessary to allow for new growth in the post-pandemic environment.
“This implies that temporary fiscal support to preserve existing jobs and businesses should be phased out as conditions improve, while measures to incentivize job creation and investment in expanding sectors and facilitate growth could be expanded. improvement and recycling of workers.
“As the recovery becomes more entrenched, fiscal policy should refocus on rebuilding buffers to counter future shocks and maintaining public funding to ensure higher levels of inclusive growth in the long term,” he said.
In terms of spending, the World Bank said the government could focus on containing the rising costs of the public wage bill and pensions; improve the targeting of social spending; phase out widespread subsidies; and strengthen the selection and management of public investment projects.
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