KUALA LUMPUR (July 18): The Ministry of Finance (MOF) stressed that tax collection and the provision of government subsidies, incentives and assistance are significant components of the country's fiscal position.

Deputy Finance Minister Lim Hui Ying said it is appropriate to change Malaysia's fiscal policy to focus on these two first to take advantage of the country's stable fiscal position at the moment.

Tax collection contributed around RM229 billion or 72.8% of the government's revenue of RM315 billion for 2023, while government subsidies, incentives and assistance were around RM80 billion or 19.7% of total government expenditure of RM406 billion, she said in reply to Kamal Ashaari's (Perikatan Nasional-Kuala Krau) question about efforts to improve revenue for the government other than through tax collection, and the implementation of targeted subsidies, during a question-and-answer session in Parliament on Thursday.

"Targeted diesel subsidies are expected to provide savings of RM4 billion per year to the government, thus achieving the set objectives, including strengthening the country's fiscal position and reducing the leakage of government aid," she said. 

Lim also stressed that the government does not intend to implement the goods and services tax (GST) presently.

"The government will continue to prioritise improving the existing tax system and introducing taxation that does not affect the vulnerable before assessing the need to introduce new consumption taxes such as the GST," she said. 

She added that the implementation of the GST will be considered when there is a suitable economic environment, especially taking into account the aspect of the impact of inflation from the rationalisation of subsidies.

Meanwhile, in reply to a supplementary question from Datuk Mohd Isam Mohd Isa (Barisan Nasional-Tampin) regarding the ministry's strategy to overcome the problem of loss of tax revenue, particularly due to the smuggling of liquor and cigarettes, and the government's real constraints in addressing the problem of smuggling, Lim said: "The government is committed to overcoming all these problems (leakage and smuggling). Among the steps we will take is the e-invoicing system that will start in August for companies with annual sales of RM100 billion.

"We will take appropriate measures to ensure the government gets the appropriate revenue," she said. 

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