Kuala Lumpur: The country’s revenue generation remains limited, and tax expansion is necessary to ensure fiscal sustainability, according to the Prime Minister’s Office (PMO).

According to BERNAMA News Agency, senior press secretary to the prime minister, Tunku Nashrul Abaidah, noted that Malaysia is among the countries with the lowest tax-to-gross domestic product (GDP) ratio in the world, at about 12 percent.

Tunku Nashrul emphasized that the government’s core principle is clear: the burden will not fall on the majority of the people. Instead, tax revenue will be reinvested into programs that benefit the people. Among these are the RM13 billion allocated for the Rahmah Cash Contribution (STR) and Sumbangan Asas Rahmah (SARA), benefiting nine million recipients.

He also mentioned that RM400 million has been allocated to refurbish dilapidated clinics, and over RM600 million to repair more than 8,000 school toilets, benefiting over five million students. “This is the true foundation of every MADANI government policy, to improve the people’s quality of life through responsible and comprehensive measures,” he said during the PMO briefing, which was streamed live on Anwar Ibrahim’s Facebook page and the PMO Malaysia Facebook page today.

On June 9, the government announced a targeted review of the sales tax rate and an expansion of the service tax scope, both of which will take effect from July 1. The sales tax rate remains unchanged for essential goods, while a five or 10 percent rate will be imposed on selected items.

Meanwhile, the scope of the service tax will be expanded to include six new services: leasing or rental, construction, finance, private healthcare, education, and beauty services. Treasury secretary-general Datuk Johan Mahmood Merican reportedly said that revenue from the Sales and Service Tax (SST) collection is expected to increase by RM5 billion in 2025 and by RM10 billion in 2026, following the implementation of the SST revised and expanded scope starting next month.