For Malaysia to achieve sustainable economic resilience, it needs to move away from reactive, year-to-year fiscal adjustments.
A structured and predictable Multiyear Tax Calendar offers a solution — a long-term roadmap for moderate, gradual tax increases that fosters confidence among businesses, policymakers, and consumers.
WHY IT IS ESSENTIAL
A Multiyear Tax Calendar is more than just a taxation strategy — it's an economic tool that fosters stability and predictability across sectors.
By outlining a clear, incremental tax adjustment plan over several years, it helps businesses plan ahead, improves government revenue forecasting, and minimises market disruptions.
In the past, abrupt and inconsistent tax hikes have dampened economic growth and investor confidence. In contrast, a Multiyear Tax Calendar creates a stable fiscal foundation, supporting long-term planning and sustainable growth.
ADVANTAGES
Economic predictability: A well-defined tax plan enables businesses to make long-term financial decisions, control costs, and adapt gradually to changes in tax policy.
Stable government revenue: Predictable tax adjustments make it easier for the government to forecast revenue, leading to more efficient budget planning.
Reduced market volatility: Gradual tax changes avoid sudden disruptions to supply chains, cost structures, and consumer prices.
Consumer adaptation: Incremental increases give consumers time to adjust, mitigating the impact of sudden price hikes.
Investor confidence: Consistent, long-term tax policies foster trust, encouraging investments and supporting stable economic growth.
Chartered Tax Institute of Malaysia (CTIM) council member Harvindar Singh notes that a Multiyear Tax Calendar gives businesses clear insight into the government's fiscal intentions, helping them prepare for future tax adjustments.
This predictability allows businesses to reassess strategies and operational plans, while also helping consumers adjust spending habits without financial shock.
Tax law expert and partner at RDS Partnerships Saravana Kumar said gradual tax increases give businesses and consumers sufficient time to adapt, avoiding the economic shocks that can destabilise long-term sustainability.
STRENGTHENING MALAYSIA'S ECONOMIC FOUNDATIONS
Malaysia must prioritise long-term fiscal strategies to build economic resilience. A Multiyear Tax Calendar is key to this, offering not only fiscal stability but also trust among businesses, investors, and consumers. It signals a commitment to transparent, long-term economic governance.
Abrupt or unpredictable tax changes often lead to reduced long-term investments, market uncertainty, and weakened trust in government policies.
A Multiyear Tax Calendar allows Malaysia to reset its fiscal course with a focus on stability and long-term vision.
CASE STUDY IN PREDICTABILITY'S BENEFITS
The impact of unpredictable tax policies is evident across various industries.
For instance, in 2015, Malaysia's abrupt 43 per cent increase in tobacco excise duties caused the illicit cigarette market to surge from 36.9 per cent to 52.3 per cent within a year, reducing tax revenue and undermining public health objectives.
Harvindar and Saravana emphasised that sharp tax hikes push consumers towards unregulated products, harming legitimate businesses.
Saravana estimated a five per cent annual increase in tobacco taxes could generate RM250 million annually for critical initiatives such as healthcare or anti-smoking campaigns.
The beer industry also illustrates how a Multiyear Tax Calendar can benefit both the government and businesses.
Despite being a stable revenue generator, Malaysia's beer industry has not experienced an excise increase in several years. A gradual tax increase plan could ensure steady revenue growth while avoiding sudden disruptions to the sector.
The sugary drinks industry stands to gain as well from structured tax policies.
With the government's ongoing efforts to tackle obesity and reduce sugar consumption, implementing a predictable excise calendar can align fiscal strategies with public health objectives while ensuring businesses have adequate time to adapt to new regulations
Additionally, adopting a tax-calendar approach for planned minimum wage increases could provide businesses with the stability needed to adjust operational costs over time. This would allow for a smoother transition and enhance economic predictability for sectors sensitive to labour cost fluctuations.
Globally, examples such as Romania and Germany highlight the success of gradual tax policies.
Romania's abrupt 2008 excise hike led to a rise in illicit trade, but a shift to incremental tax increases resulted in a 9.5 per cent compound annual growth rate in revenue and reduced illicit activity. Germany's multiyear tax strategies have also demonstrated sustained fiscal benefits without market disruptions.
By extending the Multiyear Tax Calendar to various sectors, Malaysia can build a stable, predictable fiscal foundation, fostering economic resilience and aligning government objectives with long-term public and industry needs.
BALANCED PATH FORWARD
The Multiyear Tax Calendar represents a critical step towards a resilient and sustainable Malaysian economy. Beyond taxation, it serves as a long-term economic strategy, aligning fiscal responsibility with the nation's broader economic goals.
For the government, the Multiyear Tax Calendar ensures steady and predictable revenue streams, essential for effective long-term development planning.
For businesses, it offers clarity and confidence to invest strategically. For consumers, it ensures manageable price adjustments, reducing reliance on illicit alternatives.
SEIZING OPPORTUNITY FOR FISCAL STABILITY
Malaysia stands at a crucial moment. The adoption of a Multiyear Tax Calendar is not merely an option — it is an economic necessity.
By prioritising predictability, transparency, and stability in fiscal policy, Malaysia can foster trust, encourage investment, and pave the way for long-term economic resilience.