PUTRAJAYA: Malaysia needs to be more courageous in addressing the country’s structural wage problem as many workers still do not earn enough to pay income tax, Economy Minister Datuk Seri Akmal Nasrullah Mohd Nasir said.
He stressed that raising incomes remains the government’s priority even as it seeks to broaden the tax base.
“We have to be bolder in addressing the wage issue, which remains a structural problem. The reason we are looking at broadening taxation is because wages are not sufficient for many people to pay income tax,” he told reporters after the launch of the OECD Economic Survey of Malaysia 2026 here today.
Commenting on whether the expanded Sales and Service Tax (SST) would generate sufficient revenue to support fiscal consolidation, Akmal said the government remained focused on tackling the structural issue of wages.
“I think, under the current approach, the priority is to continue addressing the structural problem relating to the wages and incomes of the rakyat,” he said.
At the same time, he said any tax measures introduced by the government must strike a balance between broadening the revenue base and sustaining economic growth.
“The taxation approaches introduced by the government also take into consideration how we can further broaden the available tax space, but not to the extent that it hampers existing economic growth,” he said.
Earlier, responding to the OECD’s recommendation that Malaysia reform its tax system by introducing a broad-based consumption tax, such as a goods and services tax (GST), and broaden the personal income tax base, Akmal said the government respected the organisation’s views but maintained that raising wages should come first.
“Only around 15% of the workforce is covered by income tax. While we respect the view from the OECD, what’s more important is how to broaden our tax income because, definitely, without higher pay or better wages, whatever tax we introduce may have some repercussions on what people consume or earn.”
“For the country at this point, the focus is on looking at the wage issue more comprehensively,” he said.
