PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim is expected to introduce more aggressive measures and reforms in Budget 2024 now that the elections are largely over. The government’s focus will be on reducing subsidies, addressing fiscal leakages, and tackling the growing national debt of RM1.39 trillion.
The financial markets and high-earning individuals will also be interested in new tax measures, as the government has indicated its intention to increase taxes on the ultra-rich in order to generate more revenue. These potential tax measures will build upon the capital gains tax on unquoted shares and the tax on luxury items introduced in the revised Budget 2023 in February.
Budget 2024 will be presented to Parliament tomorrow. Despite efforts to cut expenses, economists predict that it will be an expansionary budget for the coming year. In the revised Budget 2023, the government allocated RM386.1 billion for expenditures, exceeding the projected revenue of RM291.5 billion.
Lee Heng Guie, Executive Director of the Socio Economic Research Centre (SERC), expects to see responsible spending in Budget 2024. He believes that costly and unsustainable blanket subsidies should be phased out, while targeted social spending should remain a short-term priority. The government is committed to continuing its path of reducing the fiscal deficit, aiming for 4.5% to 5% of gross domestic product in 2024, down from an estimated 5% in 2023.
Geoffrey Williams, an economist and professor at the Malaysia University of Science and Technology, believes that Budget 2024 should focus on fiscal consolidation, significant reductions in wasteful spending, and clear policies aligned with the seven Madani Economy targets. However, he expresses concerns that the budget will likely involve increased government spending, putting pressure on tax hikes.
Aimi Zulhazmi Abdul Rashid, Associate Professor at Universiti Kuala Lumpur Business School, emphasizes that the top priority of Budget 2024 should be to increase Malaysians’ income levels. He highlights the urgent need to restore and improve people’s purchasing power, which has been affected by the long-term impacts of the Covid-19 pandemic and rising prices of goods since 2021. As subsidies are reduced, the country may face increased inflation pressures in the next year.
Prof Aimi Zulhazmi adds that Budget 2024 should address the issue of national food security, considering the recent increase in food prices and supply shortages. It should also introduce measures to stimulate a more active and resilient domestic economy, particularly in light of the ongoing decline in the country’s exports and the global economic slowdown expected in 2024. He suggests that the budget needs to focus on incentivizing and facilitating both foreign and domestic direct investments, including the transfer process for foreign companies entering Malaysia.
Earlier in August, Anwar announced the government’s commitment to strengthening foreign and domestic direct investments by reactivating the Investment Coordination Committee. Williams also emphasizes the importance of demonstrating credibility, accountability, and transparency in fiscal policy. He calls for a plan to reduce debt financing, which is the second largest component of spending, as well as a plan to cut civil service pay costs, which amount to RM31 billion. Additionally, he expects details on subsidy rationalization, cash transfers through the Central Database Hub (Padu), and the progressive wage system to be included in the budget.
Credit: The Star : News Feed
