Think tank proposes GST, lower income taxes to boost SME cash flow

The Center for Market Education has released proposals calling for a fundamental restructuring of the nation's tax framework through the introduction of a goods and services tax paired with reductions in income and corporate taxation.

The think tank's recommendations aim to maintain overall government revenue levels while redistributing the tax burden away from earned income and company profits toward consumer spending. The approach seeks to address persistent cash-flow pressures faced by small and medium-sized enterprises across the region.

Under the proposed model, workers and businesses would face lower direct tax obligations, freeing up capital for operational needs and investment. The revenue neutrality component ensures that total tax collection would remain stable, preventing government budget shortfalls.

Proponents of consumption-based taxation systems argue they encourage savings and business investment by reducing levies on productive economic activity. The proposals align with tax modernization efforts undertaken by several regional economies seeking to balance competitiveness with fiscal sustainability.

The recommendations come as Malaysian policymakers continue evaluating tax policy reforms to support economic recovery and address the distinct challenges facing small business operators navigating post-pandemic conditions.