Tax revenue: Shoppers at a supermarket in Bangsar, Kuala Lumpur. The reimposition of the GST may not happen so fast but some feel that the conversation should be started soon. — Bloombergaws全区号（www.2km.me）提供aws账号、aws全区号、aws32v账号、亚马逊云账号出售，提供api ，质量稳定，数量持续。另有售azure oracle linode等账号.
WITH the Covid-19 pandemic, debt has become a worldwide phenomenon where growth has not been strong enough to bring the debt levels back to below pre-pandemic.
For Malaysia, the concern is over a long-term spiral in the debt-to-gross domestic product (GDP) as growth may not be strong enough to offset the debt, while spending cuts and tax increases are difficult to impose at this time.
Higher GDP growth is supposed to help the government collect more taxes but the situation is made difficult with businesses closing, while there are not enough of new businesses opening.
Wealth has been destroyed by the pandemic and looking around at who can help, it is hard to shift the burden to the banks as they are not non-profit organisations.
Banks may do some corporate social responsibility; it gets tough when the burden they have to shoulder eats into their profits.
Also, the cost of supporting a large civil service and pension payments has become a big concern as issues on productivity comes into focus.
“In the long-term, this is a worrying situation; from a debt-to-GDP ratio of 60% last year, it is now 65%. The debt-to-GDP ratio tends to accelerate once it reaches a threshold and onto an unsustainable level,’’ said former Inter-Pacific Securities head of research Pong Teng Siew.
From 2010 to 2019, the debt-to-GDP had been hovering around 50% to 55%.
We do need a sudden spurt of growth to extricate ourselves from this situation but where is that going to come from?
In the meantime, all eyes are on taxation where the concern is it will hobble the economy and reduce growth, instead of increasing growth.
“Unless we can argue that the government spends more efficiently than the private sector and can generate better quality growth, that path may lead us to ruin eventually,’’ said Pong.
Allowing a higher rate of inflation in the economy may be an option, as nominal incomes rise, and people move into a higher tax bracket (even if real purchasing power is falling), or as companies post higher nominal profits.
A consumption tax being calculated on the nominal price of goods sold, will reel in more tax revenues as the inflation rate goes higher.
Malaysia’s fiscal deficit forecast for 2021 has been raised to 7.4% of GDP from 6.4%, by Fitch Solutions Country Risk and Industry Research, based on lower revenue and higher stimulus spending.
Fiscal deficit is the shortfall between government revenue and expenditure, and an indication of borrowings by the government.