8 October 2019 (Kuala Lumpur) – IDEAS has published a Brief titled “A Counter-Cyclical Tax Reform”, by IDEAS Senior Fellow Dr Carmelo Ferlito. In the brief Dr Carmelo identifies that business cycles are unavoidable and to address this, policy makers should establish a set of rules which help to prevent the economy from overheating and cushion the impact when the economy inevitably slows down. To achieve the Dr Carmelo proposes three reforms to Malaysia’s tax system:
Dr Carmelo argues that the scheme presented in the paper would present the following advantages:
Dr Ferlito adds that such a reform has a chance to achieve its targets only if it is accompanied by fiscal discipline and by rationing public expenditures, paired with a growing effort toward accountability.
These proposals build on IDEAS previous publication “Making Shared Prosperity a Reality” which proposed economic reforms to the government, including introduction of a Living Wage Tax Credit. Commenting on the publication of the paper, IDEAS Director of Research Laurence Todd said that “The government has presented its vision of Shared Prosperity, but now concrete policies are needed to realise that vision. At the same time the government needs to manage the inevitable fluctuations in the economy, whilst accepting that it cannot control everything. This publication seeks to do just that – by proposing tax reforms which are progressive and fair but also support growth in the economy, in the good times and the bad. We hope the government will consider these proposals carefully.”
A copy of the paper can be downloaded here: (bit.ly/taxreform19)
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