KUALA LUMPUR: Malaysia unveiled a leaner budget of RM372.3 billion (US$80.06 billion) for 2023 on Friday (Oct 7) amid an uncertain global environment and an expected slow growth.
The 2022 budget was touted as its largest when it was tabled last year at RM332.1 billion, but it has since expanded to an estimated RM385.3 billion, after factoring in the fiscal support to protect people and businesses from rising inflation and cost of living.
The country’s economy is forecast to expand between 4 per cent and 5 per cent in 2023, slowed from this year’s 6.5 and 7 per cent, according to the economic and fiscal outlook reports released ahead of the finance minister's speech in parliament.
Finance Minister Tengku Zafrul Tengku Abdul Aziz said the 2023 budget is guided by 3Rs - responsive, responsible and reformist.
“As part of the Malaysian Family, we need to act immediately in facing every upcoming global challenge, and at the same time be responsible in building a bright future for the children of the legacy generation,” he said when tabling the budget.
With an expected revenue collection of RM272.6 billion, the fiscal deficit in 2023 is projected to decrease to 5.5 per cent of the gross domestic product, compared with 5.8 per cent in 2022, said Mr Tengku Zafrul.
He said that based on the medium-term fiscal framework, the deficit level from 2023 to 2025 is expected to continue to decrease to an average of 4.4 per cent of the GDP.
“The government will continue to intensify efforts to improve the financial position in the medium term to achieve the deficit target of 3.5 percent of GDP as projected in the 12th Malaysian Plan,” he said.
Of all ministries, the Education Ministry will receive the biggest slice of the pie, with RM55.6 billion allocated.
Allocation for the Health Ministry will increase by 11.4 per cent to RM36.1 billion.
To tackle floods and natural disasters, the government has set aside RM15 billion for the Flood Mitigation Plan, a long-term strategy to adapt to climate change.
EFFORTS TO PROTECT PEOPLE’S WELFARE
The finance minister said the budget will focus on efforts to protect the welfare of the people, with direct cash aid given out via various schemes.
More than 450,000 households will be eligible to receive monthly assistance from the Social Welfare Department next year, with an allocation of RM2.5 billion in 2023. This is an increase from RM1.5 billion in 2020.
Families with a household income of less than RM2,500 are qualified for cash handouts, and the amount will depend on the family size.
Those with more than five children will be eligible for an aid of RM2,500, while those with one to four children will get between RM1,000 and RM2,000.
Mr Tengku Zafrul also announced that the income tax rate for middle-income individuals will be reduced by two percentage points.
Those who earn taxable income of between RM50,001 and RM70,000 will see their tax rate reduced from 13 per cent to 11 per cent, while those earning between RM70,001 and RM100,000 will have their tax rate reduced from 21 per cent to 19 per cent.
This initiative is expected to benefit 1 million taxpayers, said Mr Tengku Zafrul, adding that tax savings for the middle-income group will be up to RM1,000.
The minister also said that women who return to the workforce after taking a career break will be exempt from paying income tax for five years from 2023 to 2028.
To address the falling birth rate in the country, mothers from the lower-income groups who give birth in 2023 will be given a one-off cash assistance of RM500, with a total of RM150 million allocated for this purpose.
“There is still time to take the opportunity to have offspring next year. But please remember that this assistance is only for the mother and not the father,” he said.
https://www.channelnewsasia.com/asia/malaysia-budget-2023-tengku-zafrul-cut-income-tax-2994306
