Two tax experts, in their response to the just tabled Budget 2024, noted that Prime Minister Anwar Ibrahim, in his role as finance minister, has failed to come up with a long-term plan.

Chairman of business advisory Tricor Malaysia, Veerinderjeet Singh described it as “all short-term measures and does not tell you about long-term thinking”.

For PwC Malaysia tax leader Jagdev Singh the increase in the sales and service tax (SST) from 6% to 8% is just a stopgap measure.

Veerinderjeet said he had hoped to see a five-to-10-year plan on how the government will improve tax collection, with milestones placed along the way to track progress.

“This is something that’s always been missing. We talk about fiscal sustainability, but we don’t have clear plans. We need that but somehow it’s always missing,” he said.

“We just make broad statements, but we don’t have details and it only comes once a year,” he added.

“To me it is business as usual, it’s basically using the existing tax system. There’s nothing substantially new in the budget, just a broader announcement,” Veerinderjeet said.

He is also of the view that the luxury goods tax is unnecessary. “You can manage it through excise duty or sales tax by determining what luxury goods are and just impose the sales or excise duty on those goods,” he said.

“Introducing new legislation only adds complexity,” he added.

However, Veerinderjeet said it was reasonable to impose a 10% tax on capital gains on the sale of shares in unlisted companies. “Now it’s a matter of enforcement (to ensure there are no leakages),” he said.

He said it was also reasonable to raise the SST by 2% while giving exemptions on food and beverages to ensure it does not have a direct impact on the people.

However, he does not expect the increase to bring in much additional revenue for the government.

Jagdev sees the move to raise the SST by 2% as a prelude to the reintroduction of the goods and services tax (GST).

He said it is prudent to exclude food and beverages and telecommunication services from the increase in SST.

His view is shared by tax partner at Invatex Consulting, Poovarni Rajagopal who noted that the exemption is the government’s way to ensure that the cost of living does not rise.

However, both agreed that the tax increase for other services such as logistics, will also raise the cost of doing business, and the additional cost will be passed on to consumers through higher prices.

Jagdev and Poovarni said it was no surprise that the capital gains tax of 10%, which was initially announced last year, is applicable only for the sale of shares held by companies and not individuals.

However, Poovarni said there may come a time when capital gains on shares traded on Bursa Malaysia may be subject to tax.

Jagdev concluded that Budget 2024 delivers on a strategy within the constraints of fairly flat government revenue.

“It ticks the boxes in terms of being slightly expansionary, reducing the deficit and addressing many of the needs of the rakyat,” he said.

However, he added, more significant measures to increase government revenue will be required to provide headroom for Malaysia to transform into a high income nation.