Dictionary.com defined tax as a sum of money demanded by the government for its support or for specific facilities or services, imposed upon incomes, property, sales and so forth. The major proportion of Malaysian Government revenue is raised through taxes (“Malaysia – Politics, government, and taxation”, n.d). In 1999, Malaysian Government have earned 76% of its revenue through taxes whereby 46% from direct taxes and 30% from indirect taxes (“Malaysia – Politics, government, and taxation”, n.d). The Ministry of Housing and Local Government elucidate other sources of income which includes licenses, rentals, and government grants; inclusive of road grants, car parking charges, planning fees, compounds, fines and interests; and loans from government and or financial institutions. In order to bear instabilities in the exterior environment, a more diversified and fair economy has contributed towards better economic flexibility and resilience (“Malaysia’s economic outlook for 2009”, 2008). Since there are many sources of government revenue, are taxes the single most important way of raising government revenue?
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There are many ways for our Malaysian Government to raise revenue, but imposing taxes on the people may seem to be an important and reliable method. According to a Tax Rate Guide website (2010), our government can actually raise funds in order to run public services for the community through the sales of assets, borrowings from other parties, or taxes. However, out of these three choices, taxes are the superlative option since there is a limit to what assets the government can sell. Besides, taxes consist of major portion in source of income. Hence, it is undeniable that taxes play an important role in raising government revenue.
However, government should improvise in lowering the individual’s tax which can drastically increase the employees’ standard of living. In contrast, cigarettes tax must be raised to compromise the mission of “free smoke community” in Malaysia and as well the excise duties on beer can be increased as it remained unchanged in 2009. Besides, Real Property Gains Tax (RPGT) can be imposed, as it has not imposed tax in 2009 and before (“Malaysian Budget-2010”, 2009). As for petroleum tax, Malaysian government should accelerate tax collection by requiring petroleum companies to pay taxes in the same financial year (“Malaysian Budget-2010”, 2009). This may result a fast tax collection as in prior years tax collections are often brought down to the next financial year (“Malaysian Budget-2010”, 2009). Tax inducements should be granted for ‘installers’ or ‘bringers’ of green technology and trim down import duty on environmentally-friendly vehicles for instance hybrid cars(“Malaysian Budget-2010”, 2009). Nevertheless, Government can increase the ordinary vehicles tax to balance up or raising its tax revenue.
Although taxes consist of major portion in source of income, yet it is the not the single most important way of raising revenue. The high fuel and food prices stipulated the government to take on a flexile stand proceeding fiscal consolidation (“Malaysian Budget-2010”, 2009). In order to ensure effective public spending, fiscal policy must continue to focus on fiscal discipline with budgetary controls. Fuel subsidy, the largest component in the category is expected to decrease substantially in order to secure government budget deficit. In addition, government should revise the unnecessary spending such as white elephant construction, unproductive research and development. Budget should be allocated to industry which can generate a positive income to government such as ICT and solar energy and biotechnology. Moreover, extra concentration should be given to mining, construction and services, which are the largest contributor to GDP growth, were registered slower growth since 2008.
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Export earning is a catalyst in raising revenue as it is driven by strong exports of commodities and recovery in the exports of manufactured goods. After United States, Singapore appeared as the biggest trading partner for Malaysia, accounting for 13.5 percent of total trade (“Malaysia’s economic outlook for 2009”, 2008). Apart from that, palm oil export has to be closely observed as Malaysia is the world’s largest palm oil exporters, accounting for 47 percent of world demand. For the past whole year, the high demand and price of palm oil boost export volume and receipts to 14.9 million tonnes and 43.221 billion ringgit.
On the whole, process innovations are vital to the future success of local governments, without funding, processes will fall flat. Each of these financing innovations involved a partnership in some form, whether between government and NGOs, or government and citizens. Several instances in sub-countries where community groups worked together to raise funds or contribute their own funds and skills to enhance services are the elements of raising revenue for Malaysian Government. While priority setting is an effective way to gauge community needs, it does not necessarily mean that priorities will be met. Yet, several sub-counties still found this practice to be worthwhile because the collaboration between local government officials, community leaders and councilors in setting common goals are crucial to encouraging accountability. Thus, through enlarged faith and commitments, the whole communities may be more willing to work hand on hand in developing country.
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