The financial crisis of the last decade has brought to the fore many
discourses on the stability of the financial system under the current
interest rate regime and whether issuing more debts, that create further
divergence between the financial and real sector of the economy, is a
sustainable solution to the ensuing debt crisis that followed.
Invigorating
economic development may need more than just achieving mere growth in
GDP numbers and other mainstream macroeconomic key performance indices.
Social equity, environmental conservation, inclusive development, and
equitable income distribution are concepts that are increasingly given
more weight in the measurement of economic development. The onset of the
pandemic of the current decade has further emphasized the importance of
these considerations as well as the concept of sharing of risks and
return.
This book analyses the past and current fiscal situation in Malaysia and
identifies areas of improvements in the current tax system and public
sector financing in generating the required revenue and financing
government expenditure. The alternative fiscal framework proposed in
this book covers a tax structure that features a simple and fairer tax
system that is based on the ability to pay and public financing which is
free of interest and provides opportunity for broader participation of
the public.
As Malaysia has a comprehensive framework as well as firm regulatory and
government support for Islamic finance, the fiscal reform builds on an
important feature of risk sharing Islamic finance that brings the real
and financial sectors of the economy close together. The fiscal policy
reform recommended in this book seeks to address the public debt burden,
expand fiscal space, increase financial inclusion, reduce income and
wealth disparities, increase employment and income for the growing
population and ultimately improve social solidarity especially for a
pluralistic country such as Malaysia.
