KUALA LUMPUR, Oct 10 – The 2015 Budget to be unveiled today is likely to be filled with goodies for ordinary Malaysians yet prudent enough to ensure sustainable economic growth for the country. It will be another “inclusive” budget that will touch on as many sectors and groups as possible, while outlining measures to tide over the cost of living, ensuring more job opportunities and providing more affordable housing for the people. In short, it will be a people-friendly budget, senior Finance Ministry officials say. There will also be more relief for the low- and middle-income earners to offset higher fuel prices and the likely impact from the new Goods and Services Tax (GST), which kicks off on April 1 next year.
In other words, the government has decided to adopt the “soft-landing” approach in the initial implementation of the GST, passing more of the potential revenue to be raised from the GST back to the people in the form of one-off assistance. “In the first year (of GST), we are not raising the revenue to that extent. Although we are raising RM5 billion to RM6 billion in net revenue (from GST), we are passing the benefits back to the rakyat,” said one official. Prime Minister Datuk Seri Najib Razak, in presenting the 2015 Budget at Dewan Rakyat, will also underline the government’s commitment to rationalise the subsidy programme to further trim the fiscal deficit and achieve a balanced budget by 2020 as planned.
The speech will be telecast live from Parliament at 4pm. Other possible highlights from the Budget include:
- A CUT in personal income tax;
- AN increase in the quantum for 1Malaysia People’s Aid (BR1M);
- A BETTER package for buyers of affordable homes;
- A ONE-OFF relief package from the introduction of GST;
- GST will help broaden the tax base;
- DETAILS of the savings from the recent cut in fuel subsidy;
- ADDRESS the issue of the cost of living;
- SPECIFIC measures for youth, women and the handicapped;
- ADDRESS crime and security issues and education sector;
- MORE technical and skills training opportunities; and,
- GRADUAL reduction of subsidies will continue
Najib, who is also finance minister, will point out the huge subsidy bill is unsustainable in the long term. He will also touch on the government’s commitment to help the nation’s vulnerable groups to offset the subsidy cuts. Referring to the recent controversy over the 20-sen rise in petrol and diesel prices following the subsidy cut, Finance Ministry officials say it is a tough act balancing what is right for the economy and what is popular. In 2002, the fuel subsidy for the whole year was RM1. 6 billion. The subsidy now costs almost RM2 billion a month as the population grows and the number of cars soars. “The country will be in danger of slipping into current account deficit (spending more than it earns) and the economy will nose dive and people will start losing jobs,” said an official.
Najib is also expected to explain how the GST would improve the tax revenue and broaden the tax base. A World Bank study has pointed out that there is a 30 per cent gap between actual tax revenue collected and what can be potentially collected. “Only two million of 13 million workforce pay taxes and on top of that, the black economy (those involved in shady businesses) do not pay taxes,” said the official. “It is difficult for the government to know how much revenue it can collect from the GST. Maybe in 2016, the full year of implementation, the picture will be clearer.”