World Bank Senior Economist (Macroeconomics, Trade, and Investment) Shakira Teh Sharifuddin stated that almost half of the Malaysian workers earn less than RM2,000 per month.
The amount is much lower than the living wage of around RM2,600 per month for Malaysian workers to enjoy meaningful life in the Klang Valley.
Shakira Teh also said the decline in Malaysia’s revenue from 2012 to 2022 was one of the most significant ever among its peers.
She believes a lower revenue base is insufficient to improve the economy.
“In 2022, the poverty rate will be 6.2 percent compared to 5.6 percent in 2019, while 490,000 households are still living below the national average poverty line,” she said.
Chief Economist (Poverty and Equality) Dr Matthew Wai-Poi suggested that the country consider a broader individual income tax base and implement a comprehensive consumption tax with limited exemptions.
“One of the ways to expand the individual income tax base is to increase individual income sources,” he told Bernama outside the launch of the World Bank’s 28th Malaysia Economic Monitor (MEM) report titled Raising the Tide, Lifting All Boats on Tuesday.
Matthew said taxes, transfers, and subsidies help alleviate poverty while spending on education and health further reduces inequality.
In 2019, taxes, transfers, and subsidies have slightly relieved national poverty by 0.9 points, while he said education and health spending further reduced inequality by 6.5 points.
However, taxes and spending in this country are not as progressive as in other middle-high income countries.
Matthew said that about 90 percent of individual income tax in Malaysia paid by the top 10 percent of the highest income group (T20), roughly equivalent to 10 percent of their income.
Another 10 percent of the T20 group only pay 3.0 percent of their income, even though they can afford to pay more.
As for the health tax, he proposed an increase of 0.4 percent of the Gross Domestic Product (GDP) on tobacco and alcohol taxes.
“This figure is not big, but when combined, it is almost 1.0 percent of GDP,” he said.
MEM is the World Bank’s flagship biannual publication on Malaysia’s economic progress and development.
Also present were the Minister of Economy, Rafizi Ramli, and the World Bank Country Manager for Malaysia, Dr Yasuhiko Matsuda.
World Bank Senior Economist (Macroeconomics, Trade, and Investment) Shakira Teh Sharifuddin stated that almost half of the Malaysian workers earn less than RM2,000 per month.