KUALA LUMPUR: Budget 2025 will be a delicate balance between maintaining economic growth and ensuring that the welfare of the most vulnerable segments of society comprising low-income earners, single mothers and people with disabilities are looked after against a backdrop of rising prices.
Prime Minister Datuk Seri Anwar Ibrahim only knows too well the relentless struggle the people have to grapple with on a daily basis especially high food prices and expenses, housing shortages and access to healthcare, among other challenges.
Raising the people's living standards will be the focus of the budget which will surely be addressed by Anwar, who as Finance Minister, will unveil the country's financial blueprint for next year this Friday at 4pm at the Dewan Rakyat.
Given his generous nature, there will be something for everyone including farmers, fishermen, smallholders to daily paid wage earners and youths looking for jobs as well as housewives and gig workers.
There is obviously no shortage of accounts of families and individuals still struggling economically despite multiple initiatives in Budget 2024 to help them, for which the Prime Minister would surely have taken cognisance of.
Hence, expectations are high for these issues to be addressed possibly with a higher allocation in the budget based on Anwar's comments that it will facilitate a more equitable distribution of accelerated economic growth among a wider population as well as introducing measures to boost wages.
Budget 2024 themed "Economic Reforms, Empowering the People" involved an allocation of RM393.8 billion, with RM303.8 billion for operating expenditure and RM90 billion for development expenditure, with RM2 billion in contingency savings.
The Malaysian Institute of Economic Research (MIER) in its pre-budget takeaway recently said the budget aims to balance economic growth with targeted measures to support households, businesses and key economic sectors, while maintaining fiscal discipline.
"The budget is also expected to address pressing challenges such as cost-of-living pressures, wage stagnation and the green transition," it said.
As for taxes, Anwar had said the government will only implement the Goods and Services Tax (GST) if the minimum wage threshold is at RM3,000-RM4,000.
Currently, the minimum monthly wage in Malaysia is RM1,500. This being the case, one can be assured that GST is off the list.
KSI Strategic Institute for Asia Pacific economic advisor Anthony Dass said the government is likely to explore measures to broaden the tax base.
"For 2025, we believe the government may introduce or implement a sugar tax, a high-value goods tax (HVGT), and the global anti-base erosion (GloBE) tax," he said recently.
Dass explained that an expansion of the sugar tax is anticipated, following the Health Minister's proposal to raise the tax on sugar-sweetened beverages to 20 per cent of the retail price as part of a "war on sugar" campaign.
He added that the HVGT is expected to reappear after a delay in its implementation.
Dass said the government might also expand the scope of the sales and services tax (SST) to increase revenue.
Currently, the SST only covers 41 per cent of goods and services while previously it covered 76 per cent.
Speculation was also rife that an inheritance tax will be introduced, but Transport Minister Anthony Loke shot down claims of its possible introduction.
The Real Estate and Housing Developers' Association (REHDA) said that should such tax be introduced at any point in the future, "we believe that residential properties should be an exemption from the new rule".
There have also been high expectations of the rationalisation for RON95, following the rationalisation of diesel subsidies in June 2024 that resulted in savings of RM4 billion for the government.
But Economy Minister Rafizi Ramli's comments that the stronger economy and appreciating ringgit had given more flexibility for the government to achieve its fiscal consolidation targets, meant that the implementation of the RON95 subsidy rationalisation may be delayed.
On a macro scale, the government is expected to remain steadfast in achieving its gradual fiscal consolidation target by reducing national debt, while continuing to invest in improving the quality of life for all Malaysians.
Anwar had recently said that while the government has set targets for reducing the fiscal deficit and national debt and that it will continue to invest in areas such as education, public health and infrastructure to enhance the quality of life for Malaysians.
The national debt currently stands at 64 per cent of GDP, with the government aiming to reduce this figure to at least 60 per cent in stages.
Anwar previously noted that the fiscal deficit has been lowered to 5.0 per cent of GDP in 2023 from 5.6 per cent in 2022, with a projection of further reduction to 4.3 per cent this year. – BERNAMA